The U.S. dollar edged up against the Japanese yen from overnight levels in Asian trading Friday, as traders bought back the dollar on the view they had oversold it earlier ahead of the release of U.S. trade figures.
The U.S. dollar was trading at 104.11 yen by mid-afternoon in Tokyo, up 0.23 yen from late Thursday and above the 104.04 yen it bought in New York later that day. The euro slipped to US$1.3426 from US$1.3437 late Thursday. Against the yen, the euro rose to 139.84 yen from 139.75 yen.
The dollar was mostly higher against other regional currencies, climbing to 1.6213 Singapore dollar from 1.6194 the previous day, and to 30.815 Taiwan dollars from 30.660.
The United States was scheduled to release data later in the day on the January trade deficit, which is expected to widen. The dollar has gradually declined since last year due to worries about the large U.S. trade and budget deficits.
But the dollar rose in Asian trading as players began to think dollar-selling had been a bit overdone ahead of the trade data.
Many economists expect the January trade gap to remain relatively steady, with a consensus that it would widen slightly to US$56.5 billion from US$56.4 billion in December. Unless there's a big surprise with the trade data, the dollar is not expected to take a dive, players said.
The weak dollar mood also faded after the greenback held up despite U.S. Federal Reserve Chairman Alan Greenspan's remarks in a speech overnight in New York warning that foreigners -- including foreign central banks -- may soon tire of buying U.S. assets and financing the deficit.
"Greenspan's remarks were quite bearish for the dollar, but the U.S. unit held firm," said Tetsu Aikawa, vice president of foreign exchange trading at UFJ Bank in Tokyo.
The dollar fluctuated Thursday on vague remarks to lawmakers by Japanese Prime Minister Junichiro Koizumi about possibly diversifying the nation's massive foreign reserves. Some traders saw the remarks as a reason to sell the dollar.
The dollar recovered when Ministry of Finance officials denied Japan is about to pursue such a policy. Hiroshi Watanabe, the head of international affairs at the ministry, said it would be unwise for Japan to consider selling its dollar reserves now.
Although Koizumi's comment was not seen as indicating a shift in Japanese policy, it still reminded the market of lingering concerns about the dollar. Japan is the world's top holder of foreign reserves, mostly in U.S. Treasury bonds.