1 July 2005, 12:23  Dollar firmer in late Asian trade

The US dollar was higher against the yen and the euro in late trade here, with the greenback shrugging off a momentary bout of weakness against the Japanese currency in the wake of a slightly more upbeat than expected Tankan survey, dealers said. The unit was initially lifted by the US Federal Open Market Committee's decision last night to raise interest rates by a widely expected 25 basis points. In its statement, the Fed was also seen as continuing to keep hiking interest rates at a "measured" pace. "The US dollar strengthened unevenly against the majors following the much anticipated 25 bps hike in the target funds rate to 3.25 pct, with little indication that the Fed is looking to pause its tightening cycle at the next meeting in August," United Overseas Bank strategists said in a daily note. Then, early in the Asian session, the dollar was dealt a mild negative when the Bank of Japan released its widely watched quarterly survey results, which showed widespread improvement in the June quarter, with both large and small manufacturers and non-manufacturers more upbeat about current business conditions than three months ago. The results of the massive survey of more than 10,000 companies of all types and sizes were broadly better than expected, and showed sentiment throughout the Japanese corporate world has improved despite a sharp slowdown in export growth, the traditional driver of Japanese economic growth, and soaring global oil prices. "The BOJ Tankan indicates that business confidence remains resilient, despite looming concerns about the impact of higher energy prices," said Bank of Tokyo-Mitsubishi economist Wong Keng Siong.

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