TOKYO, April 28 - The euro remained the currency of choice on Monday, holding near a six-week high against the dollar and a four-year peak against the yen, supported by an inflow of Japanese money as the currency served as a safe haven. Dealers stayed hesitant to take aggressive positions ahead of a Japanese holiday on Tuesday but they favoured the single currency against the dollar due to weak U.S. growth results last week and over the yen in the face of softer Tokyo shares. U.S. first-quarter gross domestic product (GDP) growth came in at 1.6 percent against a 2.3 percent consensus forecast and marginally up from the fourth quarter's 1.4 percent. "People don't have confidence to buy the dollar because U.S. stocks are wobbly and bonds are strong," said Katsunori Kitakura, senior manager of the treasury department at Chuo Mitsui Trust and Banking.
"Under such circumstances, money keeps flowing into the euro through the process of elimination. It's safer to direct funds into the euro than the dollar," he added. The euro was quoted at $1.1051/56 at 0521 GMT against Friday's late New York level of $1.1034/40. Against the Japanese currency, steady yen-selling by investors pushed the euro to a session high of 132.88 yen , but it was capped by resistance around 133 yen. It was last quoted at 132.75/86 yen against 132.79 in late U.S. trade.
LOOMING UNCERTAINTIES
The dollar hovered near 120 yen, failing to break beyond the current 119-121 yen trading range as neither currency could convince dealers to incline their positions. The greenback slumped to a session low of 119.85 yen in the morning on the unwinding of long positions after the dollar dropped sharply from a high of 121.15 yen on Friday. Its losses were later pared, supported by yen-selling in the cross market by Japanese investors hunting for bigger returns by buying foreign bonds with relatively high interest rates. The dollar stood at 120.15/20 yen compared with Friday's late New York level of 120.27/32. "The dollar was undermined by weak GDP data, but against the yen, people were very careful about selling (the dollar) too heavily on North Korea and uncertainty over SARS," said Hideaki Furumaya, head of the interbank desk at Trust and Custody Services Bank. "It seems players outside Japan are growing increasingly worried about the impact of SARS on the economy, especially in Asia and Japan, giving them an excuse to sell the yen." The yen was also hurt as the Nikkei stock average <.N225> hit a fresh 20-year low, dragged down by steep falls in bellwether Sony Corp <6758.T> following shock earnings last week. The Nikkei finished Monday's session down 1.19 percent at 7,607.88 after falling as far as 7,603.76. But Japanese exporters' dollar sell orders are seen limiting the yen's downside, dealers said. "I haven't exactly heard where but watching the latest price action, it seems they're lined up around the upper half of 120 yen," Chuo Mitsui's Kitakura said. Activity was generally thin as Tokyo traders were sidelined with many Japanese manufacturers away for the "Golden Week" holidays from late April to early May. In the near term, the market is focusing on a series of U.S. economic data due later this week, including consumer confidence and employment indicators, as well as Federal Reserve Chairman Alan Greenspan's speech before Congress.//