Tokyo, Oct 16 - The dollar hovered near recent one-week peaks versus the euro on Thursday after upbeat data fueled optimism about the U.S. economy. Trading ranges were narrow as caution remained ahead of U.S. President George W. Bush's visit to Tokyo on Friday, when he is slated to meet Japanese Prime Minister Junichiro Koizumi, possibly to discuss their currency policies. "The recent dollar-selling sentiment is gradually changing," said Kenji Kobayashi, senior manager of the foreign exchange and treasury division at Bank of Tokyo-Mitsubishi. "But it's still difficult to move (in the market) ahead of Bush's visit." At 0557 GMT, the euro was around $1.1643 , little changed from late U.S. levels and not far from its one-week low around $1.1580 hit earlier in the week. The dollar was around 109.65 yen , a tad higher than the late U.S. level. The greenback gained more than a half yen in New York trade following solid U.S. data. U.S. retail sales fell by 0.2 percent in September, largely as expected, but a sharp upward revision in August and July figures hinted at strong consumption in that quarter. The Federal Reserve Bank of New York's Empire State Manufacturing Survey index of business conditions also surged to a record high of 33.7 in October from 18.35 in September.
That indicator could herald a strong reading in the Philadelphia Federal Reserve's business activity survey for October, due at 1600 GMT. Economists expect a reading of 16.0 versus 14.6 in September.
WAVA OF DATA AHEAD
Thursday will see a raft of equally important U.S. data. The Labor Department releases first-time claims for jobless benefits for last week at 1230 GMT. Economists in a survey forecast a median 388,000 new filings, compared with 382,000 in the previous week. The Federal Reserve will release industrial production for September at 1315 GMT. Economists expect a median 0.4 percent rise in output versus a 0.1 percent rise in August. Traders said strong readings in these statistics could lift the dollar. The market is also eager to hear what Bush has to say on currencies at the U.S.-Japan summit in Tokyo. While expressing support for a strong dollar, Bush said earlier in the week that markets should determine currency rates -- remarks initially taken by the market as a warning against Japanese yen-selling intervention, which sent the greenback tumbling. U.S. Treasury Secretary John Snow said late on Wednesday the Bush administration's push for flexible exchange rates was not targeted at any particular country and should apply to every region of the world.
Meanwhile, Zembei Mizoguchi, a senior Finance Ministry official, said that Japan agreed with the United States' declared stance of supporting a strong dollar and its view that currency rates should be set by markets. He also reiterated that currencies should move in a stable manner, noting that the recent rise in the yen was starting to correct on its own. "If President Bush repeats what he's just said when he is in Tokyo, that won't move forex markets much," said Etsuko Yamashita, market economist at Sumitomo Mitsui Banking Corp. "But I think the dollar is still on a declining trend in the medium-term given the problem of the U.S. current account deficit. Mr Bush probably wants a weak dollar even if he doesn't say so," she added.//