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Dollar moves narrowly at lower 116 yen level in Tokyo morning.

TOKYO, Sept. 26 Kyodo

The U.S. dollar moved narrowly at the lower 116 yen level Tuesday morning in Tokyo, with investors cautious ahead of a series of U.S. economic data.

At noon, the dollar was quoted at 116.39-41 yen, compared with Monday's 5 p.m. quotes of 116.56-66 yen in New York and 116.22-25 yen in Tokyo. It traded between 116.26 yen and 116.56 yen in the morning.

The euro was quoted at $1.2748-2750 and 148.36-41 yen, against Monday's 5 p.m. quotes of $1.2740-2750 and 148.57-67 yen in New York and $1.2784-2787 and 148.60-64 yen in Tokyo.

The dollar traded in a narrow range in the morning amid a dearth of trading incentives ahead of the U.S. data later this week, including consumer confidence data from the Conference Board later in the day and the personal consumption expenditure index later this week, dealers said.

Investors are cautious about U.S. data as softer-than-expected data would reinforce expectations for the end of the Federal Reserve's rate hike cycle and, moreover, a rate cut within this year, they said.

''The market lacked clear direction as there is no fresh incentive,'' said Keizo Tanaka, a senior currency trader in Resona Bank's market division.

''The market is becoming more sensitive to the outlook of the U.S. economy after the dollar's fall following the very weak Philadelphia Fed survey last week,'' Tanaka said.

The basic trend in the market is dollar-selling as it has become ''a fixed thing'' that there is no rate hike by the year's end and the next focus of attention is when a rate cut happens, Tanaka said.

In such an environment, any softer-than-expected U.S. data could send the dollar down, he added.

The Federal Reserve Bank of Philadelphia said last Thursday that the September manufacturing index for the Philadelphia region dropped to minus 0.4 from 18.5 in August, for the first negative reading since April 2003.
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Publication:Japan Weekly Monitor
Date:Oct 2, 2006
Words:335
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