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Dollar loses steam after early gains

JIJI

The dollar edged down below ¥104.40 in Tokyo trading Thursday, pressured by sluggish data that raised concerns over the course of the Chinese economy.

At 5 p.m., the dollar stood at ¥104.33-34, compared with ¥104.35-37 at the same time Wednesday. The euro was at $1.3588-3589, up from $1.3544-3544, and at ¥141.77-80, up from ¥141.34-37.

The greenback moved above ¥104.60 in early trading after attracting purchases in New York overnight on the back of a rise in U.S. long-term Treasury yields.

The dollar firmed above ¥104.80 in midmorning trading, helped by demand from Japanese importers as well as by purchases from short-term players following early gains in the Nikkei average.

But the dollar soon fell back after the sluggish reading in the HSBC Chinese manufacturing purchasing managers’ index for January triggered selling of the Australian dollar versus the yen.

The greenback remained weak in the afternoon, reflecting the Nikkei’s slump into negative territory. But its downside was supported by buybacks.

“The dollar’s early gains versus the yen were wiped off, with market players hoping to see upcoming overseas economic indicators,” said an official of a bank-affiliated brokerage house.

The dollar is seen as likely to stay in tight ranges below ¥104.50 for the time being, market sources said.

“The dollar’s topside is expected to be limited due to the dearth of fresh trading incentives that would lift it above ¥105,” said an official of a foreign exchange margin trading service firm.

The market’s focus is on the U.S. Federal Reserve’s policy meeting next week.