/www.fxserver.com/ Major currencies were stable on a dearth of fresh leads, with strong dollar sentiment based on rising US stocks capped by caution after recent sharp gains ahead of the release of more data from the US, dealers said.
"I get no sense that any new market-moving factors will come out in Tokyo time. The market is not reacting much to the rise in stocks (in Japan)," said Hideyuki Tsukamoto, forex manager at Mizuho Bank.
"I think that during Tokyo trading, we'll see the dollar maintain its level around the upper half of 122 yen to the dollar," he said, adding yesterday's announcement of extra government spending of 3 trln yen has been discounted.
"That has already been factored into prices," he said.
"Pessimism surround the outlook for the US economy is gradually dissipating. Whether that mood can continue or not is the question," he added.
"Expectations for upcoming unemployment figures in the US are expected to see some improvement. And the number of people with more optimistic outlooks for the US are increasing," Tsukamoto said.
"The question is whether the data will back that up going forward. Consumer sentiment seems to be strong. We haven't seen many negative factors come out against the dollar, but the issue of Iraq is still not clear," he said.
Kosuke Hanao, head of forex sales at Royal Bank of Scotland, said yesterday's downgrade of Japan's local-currency sovereign rating by Fitch had already been factored into the market.
"It was probably already discounted in the market. Of course, everyone knows that the Japanese situation is terrible," he said.
"Dollar-yen will be supported by strong dollar factors but also by the kind of gloomy financial situation in Japan. Basically speaking I would say we will see a bit of a strong dollar in the next week and a weak yen," he said.
"Yesterday's good earnings report from Hewlett-Packard will support the market. So I think we can have a little bit of a mild recovery in the equity mar ket and also the greenback in general," he added.
Hanao added that the euro/dollar is expected to trade in a 0.9950 to 1.0100 range in the near future as strong dollar sentiment is capped by fund managers in Europe who expect a stronger euro in the long run.
European Central Bank officials are due to hold a series of speeches tonight, which follows recent increased speculation of a rate cut by the bank.
Tokyo 11.45 am Sydney 9.45 am New York 3.43 pm
Dollar
yen 122.67 up from 122.65 122.73
sfr 1.4651 down from 1.4658 1.4679
Euro
usd 1.0027 down from 1.0029 1.0010
stg 0.6340 down from 0.6339 0.6338
yen 123.00 up from 122.98 122.86
sfr 1.4699 down from 1.4700 1.4697
Sterling
usd 1.5814 down from 1.5820 1.5789
yen 193.99 unchanged 193.99 193.80
sfr 2.3169 down from 2.3184 2.3182
Australian dollar
usd 0.5622 down from 0.5631 0.5627
stg 0.3555 down from 0.3558 0.3562
yen 68.96 down from 69.04 69.08