LONDON (AFX) - The dollar continued to push higher against the yen in quiet early trade on repatriation speculation, dealers said. "There's been a sharp move up in dollar-yen," Will Rugg, senior currency strategist at Standard & Poor's, said. Talk that foreign investors are pulling funds out of Japan for repatriation are boosting the dollar, he said. Speculation that exporters over-hedged to the downside is also weighing on the unit, he added. Weak Japanese industrial output data further dragged on the yen, Rugg said. Kamal Sharma at Commerzbank said news of a new Japanese anti-deflation package is being closely watched by the market. Dollar-yen has come off slightly on the back of it, he added. "The World Cup effect hasn't materialised," he said, referring to an anticipated spike in output on the back of the international football tournament which Japan co-hosted last month. However, the weakening of the yen takes the pressure off the Bank of Japan to intervene. "The BoJ is off the radar screen for the moment," Rugg said. Sterling continued to perform well against the euro, benefiting from the fact that sterling longs have not been built up to the same extent that euro longs were during the dollar slide. "Sterling is holding up well against the euro as euro-dollar has gone into retreat," Rugg said. The relative strength of the UK economy is also underpinning sterling's strength, he added. "The UK economy is better placed to weather the storm than the other G7 economies," Rugg said. UK data out later in the week will give an indication of whether domestic demand is holding up amid the current equity turmoil. "The Gfk indicator on Wednesday may show a dip in confidence as the University of Michigan index did last week in the US," Rugg said. Meanwhile, the euro remained steady against the dollar with the focus remaining firmly on developments in the US equity markets. "Volatility in the equity markets remains the central focus," Rugg said. Sharma said euro-dollar is becoming less sensitive to corporate governance scandals, noting that the dollar has failed to take a hit from news overnight that Qwest Communications International will restate financial results for 2000 and 2001, after discovering numerous bookkeeping errors. "The impact from equities has been overdone," Sharma said. Good news such as last week's announcement of increased R&D spending from Microsoft could give the dollar a significant boost as so much bad news is priced into the market, Sharma said.