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Dollar range-bound vs. yen in Tokyo amid lack of trading cues.

TOKYO, May 21 Kyodo

The U.S. dollar was range-bound in Tokyo on Monday morning amid a lack of trading cues, with its topside capped by concern over the health of the U.S. economy.

At noon, the dollar fetched 79.14-15 yen compared with 78.98-79.08 yen in New York and 79.28-30 yen in Tokyo at 5 p.m. Friday.

The euro was quoted at $1.2797-2800 and 101.28-35 yen against $1.2778-2788 and 100.93-101.03 yen in New York and $1.2672-2674 and 100.46-50 yen in Tokyo late Friday afternoon.

The dollar moved little against the yen in the lower 79 yen range in the morning due to a lack of active trading cues, remaining under pressure from a weaker-than-expected U.S. manufacturing reading last week, dealers said.

Manufacturing data for May released by the Philadelphia Federal Reserve that showed contraction cast a pall over the health of the U.S. economy, sending the dollar to a three-month low of 79.01 yen on Friday in New York.

The euro, meanwhile, slightly rose against the dollar and the yen in the morning as some market participants moved to cover their short positions, but the common currency remains top-heavy amid worries over Europe's debt crisis, dealers said.

With markets concerned over financial stability as political turmoil in Greece stokes fears of contagion in the 17-member eurozone, ''the yen is likely to continue being bought as a relatively safe asset for the time being,'' a dealer said.

Market participants are watching the Bank of Japan's two-day policy-setting meeting from Tuesday for trading cues, but the central bank is unlikely to take additional easing steps this time, dealers said.

''The BOJ can get away with no action at this point, saying that the yen has just been pulled higher by developments in Europe,'' another dealer at a major Japanese bank in Tokyo said.

''There is certainly a possibility, though, that it may take some action if the yen appreciates further in June and afterward, after Greek elections that month,'' he said.
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Publication:Japan Weekly Monitor
Geographic Code:1U2NY
Date:May 21, 2012
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