The U.S. dollar recovered against the yen from a moderate overnight fall in early Friday trading in Asia, after a closely watched survey showed Japanese business sentiments were deteriorating.
The dollar was trading at 107.42 yen late morning in Tokyo, up 0.46 yen from late Thursday here and above the 107.20 yen it bought in New York later that day. The euro fell to US$1.2955 from US$1.2965 late Thursday but rose to 139.20 yen from 138.63 yen.
A negative outlook on the Japanese economy tends to push the dollar higher against the yen.
A quarterly survey by the Bank of Japan called "tankan" found that large Japanese manufacturers are becoming less optimistic about their business outlook, underlying growing worries about the fragility of the nation's economic recovery.
The index of corporate sentiments about business conditions for large manufacturers fell 8 points to 14 in March, from 22 in the December survey. Economists surveyed by Dow Jones Newswires on average had forecast an index of 22 for March.
The tankan's sentiment indexes measure the percentage of companies saying business conditions are better, minus the percentage saying things are worse.
In New York, the dollar fell back modestly Thursday in another day of calm trading ahead of the release Friday of U.S. March non-farm payrolls and the Bank of Japan's tankan.
Weighing on the dollar overnight were U.S. data on unemployment claims, which rose unexpectedly, as well as February's personal income figures that also increased by less than expected.