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REFILING: Dollar trades narrowly at lower 108 yen level in Tokyo morning.

TOKYO, Sept. 4 Kyodo

(EDS: FIXING ECB'S KEY INTEREST RATE AT 6TH GRAF)

The U.S. dollar moved narrowly at the lower 108 yen level Thursday morning in Tokyo, as investors refrained from active trading ahead of the European Central Bank's policy meeting later in the day.

At noon, the dollar fetched 108.08-13 yen against 108.25-35 yen in New York and 108.90-91 yen in Tokyo at 5 p.m. Wednesday.

The euro traded at $1.4495-4498 and 156.70-75 yen versus

$1.4492-4502 and 156.95-157.05 yen in New York and $1.4420-4421 and 157.04-08 yen in Tokyo late Wednesday.

The dollar stayed within a narrow range against the yen as investors were focused on the economic conditions in Europe ahead of the ECB's rate decision later in the day, dealers said.

''There is actually no buying incentive for the dollar or the yen at this point,'' said Toru Umemoto, chief foreign exchange strategist in Tokyo at Barclays Bank.

The euro kept its weak note against the dollar and the yen on wariness that the central bank may soften its hawkish stance, although most analysts expect it to keep the key interest rate unchanged at 4.25 percent, dealers said.

Investors will be watching whether recent sluggish economic indicators in Europe will cause any moderations in the tone of ECB President Jean-Claude Trichet when he holds a press conference after the policy meeting, they added.

Eurostat, or the Statistical Office of the European Communities, reported Wednesday that retail sales in the eurozone fell 2.8 percent in July from a year before. It also said the eurozone economy saw its first ever quarterly contraction in April-June period, confirming its initial announcement made mid-August.

Also being watched is a rate announcement by the Bank of England also slated later in the day, Umemoto said.

''Market players are focusing more on the BOE which they speculate will announce a rate cut on the bleak British economy,'' which may trigger further selling of the British pound and the euro as well, he said.

The selling of the pound and the euro was triggered earlier this week by British Chancellor of the Exchequer Alistair Darling's bleak remarks about the British economy, which eventually led to broad selling of high-yielding currencies against the lower-yielding yen, dealers said.
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Publication:Japan Weekly Monitor
Date:Sep 8, 2008
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