The U.S. dollar recouped initial losses against the Japanese yen in Monday morning trading in Asia as the market shrugged off economic data that supported optimism about the Japanese economy.
The dollar was trading at 104.40 yen at late morning in Tokyo, up 0.29 yen from late Friday here and above the 103.88 yen it bought in New York later that day. The euro rose to $1.3449 from $1.3427 late Friday, and to 140.57 yen from 139.80 yen.
The dollar fell in early trading after the Japanese government released revised economic data that showed the economy had grown slightly in the October-December quarter, rather than contracted as it had said initially.
Optimism about growth tends to be positive for that nation's currency. But some analysts said reaction to the data was mixed because although the overall growth numbers were better than the initial report, other indicators set off worries about the health of the Japanese economy.
Mizuho Securities chief market economist Yasunari Ueno said the data wasn't a convincing indicator for economic strength. The latest revision shows that Japan's gross domestic product, the value of goods and services a nation produces, was supported by rising inventories but capital investment and consumption were faltering.
But the dollar's rise wasn't strong as bearish sentiments about the dollar remain, traders said. Concerns about the big U.S. trade and budget deficits are the main factors pushing the dollar down, although the dollar has gradually recovered in recent months.
"The GDP is about things of the past but the contents of the data, combined with recent poor performance in machinery orders, suggest Japan may remain in a soft spot a bit longer" said Bank of Tokyo-Mitsubishi foreign exchange analyst Kikuko Takeda.
The dollar dipped last Friday in New York after the United States posted its second-largest monthly trade gap on record.
The January trade deficit, released at the beginning of the New York session, was wider than economists expected and highlighted the challenges facing the U.S. currency. But following a week in which the dollar had broadly declined, trading in reaction to the Commerce Department's report was erratic.