/www.fxserver.com/ The dollar/yen pulled back late morning from gains inspired by Wall Street's sharp bounce overnight on technical resistance as well as uncertainty on the outlook for US stocks and Japanese policy moves, dealers said.
"It depends on the US market. The surge in US stocks helped the dollar higher," said Minori Takeuchi, foreign exchange strategist at JP Morgan Chase.
"I think the yen will weaken further but no one is sure about the US stockmarket," she said, noting negative numbers from Intel after the close following positive earnings figures released during Wall Street hours.
"The bad corporate news has already been discounted in the market somewhat," she added.
State Minister for Economic and Fiscal Policy Heizo Takenaka said this morning the taskforce he created to investigate accelerated non-performing loan disposals aims to release its report early next week.
The taskforce was set up under the Financial Services Agency, the regulator for the financial sector, which Takenaka also heads, and many had expected its initial report on the problem to be released this week.
"We are not so sure what Takenaka will announce in the interim report," said JP Morgan's Takeuchi, noting the expected delay.
Takenaka said this morning he agrees broadly with proposals for increased bad-loan disposals released last week by the Bank of Japan.
The BoJ has said the government should consider the need for capital injections into banks and aim to "pre-emptively" prevent a financial crisis, adding that it will try to raise provisioning through tougher inspections.
Nevertheless, Takenaka declined to comment on whether the FSA aims to review banks' loan assets more aggressively or set targets for disposals.
"Technically speaking the dollar may try 125.30-50 yen but it is moving very slowly," Takeuchi said.
"We are still struggling to go higher," she said, noting the long-awaited breach of a previous recent high of 124.63 yen had not resulted in the sharp gains some had expected.
The euro this morning retraced some of its gains against the yen that had brought it to a three-year high last week.
"People are buying (the euro) by default. The dollar's dangerous if the US starts attacking Iraq so they are buying the euro and other currencies," Takeuchi said.
Tokyo 11.00 am New York 4.03 pm London 4.27 pm
Dollar
yen 124.69 down from 124.77 124.72
sfr 1.4950 down from 1.4969 1.4942
Euro
usd 0.9807 unchanged 0.9807 0.9820
stg 0.6316 down from 0.6324 0.6313
yen 122.28 down from 122.36 122.55
sfr 1.4661 down from 1.4680 1.4677
Sterling
usd 1.5526 up from 1.5507 1.5557
yen 193.59 up from 193.48 194.02
sfr 2.3211 down from 2.3212 2.3244
Australian dollar
usd 0.5466 down from 0.5469 0.5468
stg 0.3520 down from 0.3527 0.3514
yen 68.15 down from 68.23 68.20
© AFX News