Forex - Euro weak in midmorning Tokyo; Asian trade thin, technical ------------------------------------------------------------------ TOKYO (AFX-ASIA) - The euro continued to show weakness in midmorning, though with little real activity as Asian trading remains extremely thin and driven by short-term technical activity, dealers said. Standard & Poor's MMS managing analyst Hideki Naito said trading in Asian time is quiet as major currency moves are concentrated in New York time, "The euro/dollar has been dripping down," he said, though yesterday it hit a six and a half week low of 0.8868, partly as a result of liquidation of euro-long positions built up after the September 11 attacks. "Those long-euro positions have almost been liquidated (but) currently the trading bias has shifted to the (euro) downside," he said, noting that the market now expects the European Central Bank not to cut rates this week. Naito said the euro saw a bottom of at low-88 cent levels during September so short-term traders are likely to target the 88.00-88.50 cent range. "Moderate speculative buying should appear at that area unless there is a fall through and they will join in the selling," he said. Hideyuki Tsukamoto, manager of the foreign exchange department at Fuji Bank, said the euro looks set to consolidate some of its losses in the near-term. "It looks like euro-dollar trading, which has been moving in a box, is hitting the bottom end," he said. The yen has also been weakened by speculative selling by US funds, backed up secondarily by talk over fundamentals. These include Japan's weakening trade position, purchases of Treasuries by local institutions and Toyota's decision to maintain some funds earned in dollars and euro in those currencies rather than converting them into yen. However, Naito said these are not important drivers for the market in the near-term, especially given that Japanese institutions are hedging their currency exposure to Treasury investments and the Toyota TOKYO, Oct. 24 (Kyodo) - The U.S. dollar was little changed against the yen in Tokyo on Wednesday morning compared with its late trading levels in New York the day before. At midday, the dollar traded at 122.59-62 yen, compared with 122.55-65 yen in New York at 5 p.m. Tuesday. It changed hands at 122.60-65 yen in Tokyo late Tuesday. The U.S. currency moved between 122.47 yen and 122.65 yen during the morning in quiet trading. In New York on Tuesday, the dollar rose to 123.05 yen at one point but later came down on reports of anthrax bacteria being found at a mail-processing center for the White House. Dealers said sentiment for the dollar is firm, with many players having become optimistic about a recovery in the U.S. economy. "The market's attention now is on the prospects of a U.S. economic recovery," said Takayuki Togawa, foreign exchange manager at Tokai Bank. "There are worries about terrorism, but the market's responses to reports of the anthrax scare have become dull, and it looks as if such reports will be brushed aside unless they are really serious," Togawa said. Dealers said, however, that there is still some sense of wariness about the dollar rising too quickly against the yen. "The U.S. authorities probably would not allow the dollar to rise above 125 yen, since that would have a negative effect on U.S. manufacturers," a dealer at another Japanese commercial bank said. "They are trying to get capital gains, not forex gains," he said of domestic portfolio managers. Speculative players have been buying one-week call options at around 122-124 yen and they will take quick profit in the cash market within this range, keeping the dollar in check for the time being, he added. Fuji Bank's Tsukamoto believes sentiment remains positive towards the dollar/yen but may be tested by US figures next week. "The underlying tone is that bullish prospects on the dollar will continue little by little. (US) Stocks are starting to advance and ahead of next week's economic figures," which will show a continued impact from the attacks, he said. "We may see some profit-taking in US stocks. Consequently, we may also see some profit-taking in the currency market, with the dollar's advance stopping around the 123-yen level."