TOKYO (AFX-ASIA) - The dollar was higher in midmorning, continuing overnight short-covering, spurred in part by speculation that Japanese firms are heavily exposed to Enron Corp, dealers said. The yen fell against the dollar in New York trade, pressured by market speculation that Japanese banks and companies could incur heavy losses from the financial collapse of Enron. Several Japanese investment trusts have exposure to Enron debt. However, dealers in Japan said the rumours seem to be opportunistic, even if true, with the dollar/yen remaining within its recent technical range. The market ignored this morning's weak CPI and unemployment numbers. Royal Bank of Scotland head of foreign exchange sales Kosuke Hanao said the rumours related to Enron seem to be simply an excuse to sell off the yen, noting that the dollar also rose against the euro and Swiss. "The main reason for the US dollar short-covering is the stock recovery. The market is looking at US-asset factors," Hanao said, noting that worsening Japanese indicators this morning had little impact. "The figures are bad but they are already discounted in the market." Hanao said that while there is no reason to buy the yen, the dollar may struggle to push strongly higher beyond the existing range of around 123-135 yen, given the lack of appetite for foreign exchange risk by Japanese investors. "Foreign investors want to buy but they already have huge positions," with only little room to increase yen-short positions, he said. "To pursue the dollar on the upside, Japanese investors have to buy ... but life insurers are on the sidelines as they are generally shrinking risk assets on their balance sheets," he said. In addition, the risk of profit-taking in the US stockmarket towards the year-end may keep a cap on the dollar, Hanao said. "The US stockmarket will be a little bit toppish ahead of the year-end." Nikko Trust and Banking foreign exchange manager Yasuji Yamanaka expects a tight dollar range of 123.50 to 124.50 yen. "Once we broke 123.40-50, last week, then the dollar traded really on the strong side but it still seems that around the 125 level there was some selling interest and also there is some psychological resistance," he said. "All the news yesterday and today will support dollar/yen, I guess, but today we have the GDP numbers from the United States, and also the weekend and month end, so still people will be nervous," he said. Next week "we will have some numbers from the US --NAPM, unemployment numbers. If the numbers are good, maybe we will resume the strong dollar trend again. Otherwise, we will be stuck in a range."