/www.fxserver.com/ The dollar eased in late morning trade after earlier testing higher, driven by technical foreign hedge-fund activity and with gradual selling by domestic exporters capping the upside, dealers said.
"The main drivers of the market would be foreigners," said Hidehiko Inamura, a dealer at Citibank, noting earlier "good buying from hedge funds" up to the 120-20-30 yen level.
However, short-term investors are taking quick profits within a narrow range, helping to contain the dollar/yen for the time being.
"Clearly they are trying to short the dollar and buy back. They tried to buy the upside by buying options," Inamura said.
Longer-term, the dollar is likely to continue higher on weak sentiment towards the Japanese economy and government reforms, dealers said, with the possibility of a move towards 124.95 and the 200-day moving average at 126.55.
Nevertheless, the rise is likely to be tempered by exporter selling.
"Exporters are selling gradually," Inamura said, adding that they will need to hedge their receivables further if the dollar goes above 121 yen.
The market is also waiting for Fed chairman Alan Greenspan's speech later today for signs of change in monetary policy as well as any indications of an imminent attack by the US on Iraq.
Inamura said he personally expects the Fed to leave rates on hold at its next meeting on Sept 24, given the recent stability in equity markets.
"They need more data to cut 50 basis points," he said.
Tokyo 11.00 am New York 5.10 pm London 12.22 pm
Dollar
yen 120.16 down from 120.26 120.60
sfr 1.4997 down from 1.5012 1.5072
Euro
usd 0.9768 up from 0.9763 0.9712
stg 0.6287 up from 0.6281 0.6273
yen 117.37 down from 117.43 117.12
sfr 1.4649 down from 1.4659 1.4647
Sterling
usd 1.5536 down from 1.5539 1.5480
yen 186.68 down from 186.88 186.66
sfr 2.3399 up from 2.3328 2.3337
Australian dollar
usd 0.5520 up from 0.5479 0.5484
stg 0.3553 up from 0.3525 0.3541
yen 66.32 up from 65.91 65.14
© AFX News