TOKYO, Jan 28 - The dollar edged up against the yen on Wednesday after meeting broad-based selling on weak U.S. consumer confidence data, but it continued to struggle on doubts about Japan's commitment to intervention. Helping the dollar along was Japanese Finance Minister Sadakazu Tanigaki, who said on Wednesday that recent moves in the foreign exchange market were slightly rapid and that Japan would act against any overshooting. But the greenback seemed unable to veer from its overall downtrend as speculators focused on bearish U.S. data and remarks that Tanigaki made on Tuesday. The dollar slumped to fresh three-year lows around 105.45 yen on Tuesday, pressured by Tanigaki's comment that Japan's intervention policy was not aimed at keeping the yen at a certain level. Overseas players took the comment as a sign that Japan may hold off from intervening aggressively before a key meeting of the Group of Seven (G7) industrial powers next week. "Speculation is rising especially from overseas that Japan will refrain from conducting heavy intervention ahead of the G7 meeting after Tanigaki's comments," said Shogo Nagaya, manager at Nomura Trust and Banking. At the time of the previous G7 meeting in Dubai on September 19-20, Japanese authorities refrained from conducting any interventions between September 16 to 30, despite the dollar dropping after the meeting to around 111 yen from 115 yen. At 0305 GMT, the dollar was at 105.75/80 , up from late U.S. levels of 105.59/67.
U.S. FUNDAMENTALS
Dealers said the greenback's down-swing against the yen could pick up momentum should it break through 105 yen, where a major option-sell trigger was rumoured. "To find out Japan's stance on intervention, the market will push the dollar downwards to see whether it has actually loosened its grip," said Yukihiro Shimoyamada, a vice president at UFJ Bank. Market focus was also on U.S. fundamentals, traders said. U.S. consumer confidence improved in January but Americans were still having a tough time finding jobs, the Conference Board said. Its index of confidence jumped to 96.8 in January from a revised 91.7 in December. Analysts had forecast a rise to 96.3, but traders said the market expected an even better report, triggering heavy dollar-selling on Tuesday. Bullish signs in a German business confidence index encouraged euro-buying on Tuesday, although follow-through buying was limited in Tokyo. The euro backed off slightly to $1.2620/23 , compared with $1.2636/42 in late New York trade. The influential German Ifo economic research institute, which polls about 7,000 firms each month, said its index rose to 97.4 in January, the highest in three years, from an upwardly revised 96.9 in December. Against the yen, the euro was little changed at 133.46/51 yen . It fell to a one-week low of 131.97 on Tuesday. Later in the day, the Federal Open Market Committee will finish up its two-day policy meeting although no interest rate change was expected.//