Wed Aug 25, 2004
By Kazunori Takada

TOKYO (Reuters) - The dollar recouped earlier losses against the yen on Thursday, but currencies shuttled in narrow ranges as investors awaited direction from U.S. growth data and comments from Federal Reserve chief Alan Greenspan.

The dollar slipped to a session low of 109.89 yen in early trade as Japanese stocks continued to rally and after data showed a larger-than-expected trade surplus in Japan, but the currency later found support on buying by Japanese importers.

"There is buying at the lower end of the range and selling by exporters at the upper end," said Toshiaki Kimura, chief manager of the forex division at Mitsubishi Trust and Banking.

At 2244 EDT, the dollar bought 110.10/15 yen compared with 110.14 yen late in New York trade.

The euro was at 132.98/03 yen versus 133.05. It fell to a seven-and-a-half week low of 132.03 yen on Wednesday.

The European single currency was little changed at $1.2080/82, within sight of the two-and-a-half-week low of $1.2053 hit on Wednesday.

The yen got a slight boost from news that Japan's trade surplus rose 44.2 percent in July from a year earlier to 1.1378 trillion yen ($10.33 billion), up for a 13th consecutive month and topping expectations for 882.4 billion yen.

"As long as the trade surplus is there, the yen faces a strengthening bias," said Yukihiro Shimoyamada, a forex trader at UFJ Bank.

Tokyo's Nikkei stock average ended morning trade up 0.49 percent, or 54.47 points The Nikkei rose 240 points in the previous three days.

GREENSPAN WATCH

Traders said the market was waiting for U.S. second-quarter growth data and a speech by the Fed chief, both slated for Friday.

"We had bullish comments from (Federal Reserve Board Governor Ben) Bernanke, so Greenspan could give upbeat comments," said Kimura of Mitsubishi Trust.
"If that is the case, at least in the short term, it will help the dollar."

Bernanke said late on Monday that rising oil prices would weigh on U.S. economic growth but the increases seen so far would not derail the expansion.

Some traders said Greenspan might also shed light on the condition of the U.S. jobs market, a vital element for the Fed when deciding monetary policy.

If U.S. jobs figures due out next week are weak for the second consecutive month, the dollar could be sold on fading expectations for further tightening of interest rates when the Fed meets later in September, dealers said.

Currencies showed little reaction to weekly capital flows data for Japan.

Japanese investors were net buyers of foreign bonds last week after net sales a week earlier. Meanwhile, foreign investors scaled back buying of Japanese bonds, after logging huge net buying of more than 1.1 trillion yen in the week ended Aug. 13. ($1=110.10 yen) (Additional reporting by Chikako Mogi)

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