TOKYO, Sept 12 - The dollar was steady against the yen on Friday as demand for the Japanese currency on the back of a buoyant Tokyo stock market was mitigated by wariness of intervention by the Japanese authorities. With the yen beaten back by what traders suspected was Bank of Japan (BOJ) intervention almost every day this week, the dollar was pinned in tight ranges near 117 yen , about one percent above 3-Ѕ month lows set last week. "People are cautious about intervention, and there probably has been intervention all week," said Kosuke Hanao, head of foreign exchange sales at Royal Bank of Scotland in Tokyo. "Having said that, demand for Japanese stocks and the yen is strong and that is keeping the dollar's rebound very limited."
At 0554 GMT, the dollar was at 117.02/07 yen, virtually unchanged from around 117.05 late in New York on Thursday. The Nikkei average <.N225> ended trade up 1.58 percent, although it owed much to Wall Street's rebound a day earlier. Global investors had seen more evidence earlier this week to be bullish on Nikkei stocks after Japan revised its second quarter growth figures upward, saying its economy was growing at an annualised rate of 3.9 percent -- exceeding U.S. growth of 3.1 percent in the same quarter.
Japanese authorities insisted, however, that the yen should not strengthen despite the improving economic outlook. "There are now brighter signs on Japan's economic outlook, but there are still uncertainties and the U.S. economy is firm," Vice Finance Minister for International Affairs Zembei Mizoguchi told reporters. "So it's not a situation which warrants a further rise in the yen." The BOJ left its monetary policy unchanged after a two-day meeting, but the decision had been widely expected and did not affect the currency market.
FOCUS ON U.S. RETAIL SALES
The greenback regained some strength against the euro, due in part to relief that no disastrous incidents happened on Thursday, the second anniversary of the September 11 attacks. The euro stood at $1.1177/78 against Thursday's $1.1201/07. Still, weak U.S. jobs data on Thursday kept the dollar from firming much further. Weekly jobless claims climbed to 422,000 last week. Analysts had expected a dip to 400,000 after the previous week's surprise jump to a revised 419,000. The market's focus has turned to U.S. retail sales data later in the day. "There are still plenty of reasons to sell the dollar, given renewed uncertainty about the U.S. economic outlook since last week's jobs data and persistent tensions in the Middle East," said Hideaki Furumaya, head of the corporate desk at Trust and Custody Services Bank. "It will be very important to see today's retail sales data to judge the outlook for the economy." Economists polled by estimated that retail sales rose 1.4 percent in August after a 1.4 percent gain in July. Excluding automobiles, they predicted retail sales rose 0.8 percent, also the same as July.//