The yen was flat against the dollar and firmer against the euro in afternoon trade here, with its recent weakness appearing to have changed direction following early Japanese economic data, and ahead of the FOMC meeting which starts tonight, dealers said. Speculation that the yen's recent weakness may be a topic of discussion at next month's G7 meeting however limited its recovery trend, they added. The release this morning of Japan's unemployment rate, household spending data and a sharp rise in inventories were generally seen as further weakening the Bank of Japan's case for raising interest rates next month, dealers said. The government said spending by households in December, at an average 340,959 yen, was 1.9 pct lower in real terms than a year before, declining for the 12th straight month and worse than the consensus of a 1.2 pct drop. "Judging from the recent set of data ... consumer spending is not showing clear signs of a rebound as strong as the Bank of Japan had been hoping for," said NLI Research Institute senior economist Taro Saito. After trading above 122.00 per dollar overnight in New York, the yen strengthened to the 121.55/usd this morning after reports that European officials were unhappy about the Japanese currency's recent drops and could broach the subject at the G7 meeting in February. "So far, there is no collective agreement on how to address the yen, except to complain and repeat past comments that the yen should reflect Japans recovery," noted analysts at DBS Bank. "With Eurozone officials unlikely to stop barking at yen weakness, the market is careful about adding to yen carry trades." After some volatility in the currency markets this morning, most major currency pairs settled down in narrow ranges in the afternoon session, as players held their positions before the start of the US Federal Open Market Committee meeting tonight.