/www. fxserver.com/ By Kazunori Takada
TOKYO, Oct 23 - The dollar stayed in a tight range against the yen in Tokyo on Wednesday, showing a muted reaction to a delay in the release of a report on plans to clean up bad loans plaguing Japan's banking sector.
But many players said a recent trend of yen-selling had not changed and more such movements could be expected once the contents of the report were revealed.
"The market is waiting to confirm the contents of the plan and the anti-deflation measures," said Toru Umemoto, currency strategist at Morgan Stanley in Tokyo.
"Once it is released, I think we could see 126 or 127 yen."
For now, tight market positions have locked movements in major currencies.
"Speculators have built up long dollar positions, and plenty of selling is detected below 126 yen, so it's hard for the market to test the dollar's upside," said a Japanese trust bank dealer.
Heavy orders from Japanese exporters were said to be lined up above 125.50 yen.
Some traders said a dip in U.S. share prices on Tuesday was also weighing on the greenback. The Dow Jones industrial average and S&P 500 ended the day with losses of about one percent, while the Nasdaq Composite index fell 1.29 percent.
As of 0224 GMT, the dollar was at 125.09 yen against 125.04 in late New York. Some traders looked to a 200-day moving average of 125.58 as the next key level.
The euro was at 97.67 cents against 97.80 in late U.S. trading. The single currency stood at 122.12 yen against 122.25.
REPORT DUE LATER IN MONTH
Financial Services Minister Heizo Takenaka surprised markets by delaying the release of an interim version of his report on cleaning up bad loans, which had been expected on Tuesday evening.
Takenaka said on Wednesday he would skip the interim report and instead issue a final version by the end of the month.
He stressed that Prime Minister Junichiro Koizumi backed his report.
"The prime minister said (at Wednesday's cabinet meeting) that we should go along with my policy, so we will follow that direction," he told a news conference.
Markets worry that Takenaka's plan will take a hard line that could lead to further deflation and prompt bankruptcies.
"That's why the market is focusing on the government's anti-deflation package to see what kind of safety-net measures they will be able to come up with," said Motoshi Imura, senior manager of the foreign exchange and treasury division at Bank of Tokyo-Mitsubishi
Trade and Industry Minister Takeo Hiranuma said a government's anti-deflation package would be decided on Friday.
Among more near-term factors, some players were look ahead to a speech by Federal Reserve chairman Alan Greenspan and the release of the Fed's Beige Book later in the day.