LONDON (AFX) - The dollar was firmer in midday trade against the Japanese yen following a sharp fall on the Nikkei overnight but the euro was struggling to recoup earlier losses following German wholesale price data, dealers said. Dollar/yen has been boosted by market disappointment about the speed of reform in Japan following the meeting between President George W Bush and Prime Minister Junichiro Koizumi. "There has been nothing of note out of the meetings between Bush and Koizumi over the past two days, and it now looks as if the yen will start to creak again all the way to our 140 yen target over the next few months," said Bear Stearns currency economist David Barrow. Compounding the yen's woes was a sharp overnight slump on the Nikkei, following comments from finance minister Masajuro Shiokawa. He said the government will not ask the Bank of Japan to buy foreign bonds held by domestic institutions as a way to ease monetary policy further. Meanwhile the euro was struggling to climb back above the 0.8700 usd level after disappointing German wholesale prices reduced hopes of an imminent rate cut from the European Central Bank. There's also growing unease that upcoming euro zone fourth quarter GDP data will be negative for the euro, said BNP Paribas currency strategist Ian Stannard. France, he said, should post a slight positive but Germany is likely to see a contraction, which will put the euro under pressure. "There are also a lot of concerns about Germany's fiscal position with regard to the low growth numbers," he said. Sterling was rangebound after Bank of England governor Eddie George downplayed expectations of an aggressive tightening of policy. He cautioned against placing too much importance on short term interbank rates as an indicator for the direction of UK interest rates. Nevertheless, rates are expected to rise sooner and faster than anywhere on continued consumer buoyancy, evidenced today by further strong housing data. For some, the interest rates differential will be sterling positive; for others it could mark a sharp economic retraction that would knock the pound.