Dollar trades at lower 122 yen level in Tokyo morning deals

The U.S. dollar traded in a tight range at the lower 122 yen level Wednesday morning in Tokyo as market participants refrained from leaning in one direction amid little market moving data or events.

At noon, the dollar was quoted at 122.26-31 yen, compared with Tuesday's 5 p.m. quotes of 122.41-51 yen in New York and 122.41-44 yen in Tokyo.

The euro traded at $1.3610-3615 and 166.47-52 yen, against $1.3603-3613 and 166.58-68 yen in New York and $1.3599-3602 and 166.50-54 yen in Tokyo.

The dollar was stuck in a tight range in lower 122 yen territory with many market participants sitting on the sidelines due to a lack of incentives as well as the absence of U.S. traders due to Wednesday's Independence Day holiday.

Dealers said the dollar's upside remained heavy as some currency traders sold the U.S. currency due to a dollar-selling trend.

''Recent U.S. economic data have shown that inflationary risks have somewhat calmed there and with jitters in the subprime sector, some have begun to consider the possibility of an interest rate cut within the year,'' said Masashi Hashimoto, a senior trader at the Bank of Tokyo-Mitsubishi UFJ.

He was referring to economic readings including Monday's Institute for Supply Management survey of business confidence among U.S. manufacturers for June, which came out a tad higher than the market forecast of 56.0, and recently released weak U.S. home sales data for May.

''Market participants had been optimistic about the U.S. economic outlook for the past couple of months,'' pushing the dollar higher, Hashimoto said. ''But that prospect has somewhat abated.''

But the dollar remained underpinned by an overnight rise in U.S. Treasury yields.

On Tuesday, the 10-year note's yield rose for the first time in three days and returned to the 5 percent level. U.S. stocks also gained overnight, giving investors confidence to invest in high yielding assets, dealers said.