The dollar was static around ¥109.50 in calm Tokyo trading Thursday, with investors retreating to the sidelines ahead of important overseas events.

At 5 p.m., the dollar stood at ¥109.54, up from ¥109.45 at the same time Wednesday. The euro was at $1.2160, down from $1.2183, and at ¥133.21, down from ¥133.34.

After moving above ¥109.60 in early trading, the dollar dropped to around ¥109.50 in the midmorning on selling induced by the strength of the Chinese yuan against the greenback reflecting media reports that U.S. and Chinese commerce ministers agreed to promote cooperation on trade and investment.

The U.S. currency then fluctuated in a narrow band amid a wait-and-see mood ahead of the release of the U.S. consumer price index for May and the European Central Bank’s policy-setting meeting later in the day.

In late trading, the greenback firmed somewhat on the back of position-adjustment selling of the euro ahead of the ECB meeting and a modest rise in long-term U.S. Treasury bond yields in off-hours trading.

Market players are increasingly cautious about the possibility of the exchange market showing instability as the release of the CPI and the start of ECB President Christine Lagarde’s news conference after the policy meeting are scheduled at the same time, an official at a foreign exchange margin trading service firm said.

The May CPI is being closely watched as a factor for predicting when the U.S. Federal Reserve will kick off discussions on scaling down its quantitative easing.

Meanwhile, some said that the dollar is expected to meet with selling when it rises close to ¥110 but is likely to be supported by buying on the dip around ¥109.

“The dollar would need a considerable amount of energy to climb out of its current range of 109-110 yen,” a currency broker said.

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