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Dollar eases in Tokyo

but tone remain strong

TOKYO: The dollar eased slightly in late Tokyo, going below 98 yen on profit-taking, but remained firmly supported on strong bids at around 97.50 yen, dealers said.

Trading was choppy throughout the day, with movements stuck between profit-taking and short-covering, they added.

Dealers said the halt in the dollar's rise was in response to recent sharp gains, but its tone remained strong.

"The dollar has come this far rather rapidly. We're all looking at whether there will be further buying at higher levels," said Takeshi Miura, a dealer with the Long-Term Credit Bank of Japan.

But Miura added that the market was searching for incentives to further buy up the dollar and was becoming insensitive to any dollar-negative factors.

The dollar's movement against the yen was range-bound, in repeated cycles of profit-taking above 98 yen followed by buying at around 97.50 yen, dealers said.

An absence of exporters' selling also gave firm support.

Buying of the dollar by life insurers along with interbank and overseas operators solidified its bottom, dealers said.

"Heavy purchases by the insurers pushed up the dollar from around 97.50 yen," said a dealer at a long-term credit bank.

Some dealers also cited vague rumours of dollar-buying by the Bank of Japan (BOJ) at around 97.80 yen in early afternoon, but this could not be confirmed.

Dealers said they were cautious about creating large positions ahead of U.S. June trade data due at 1230 GMT today.

U.S. economists estimate the U.S. June trade deficit will decrease to $10.7 billion from $11.43 billion in May.

"Any large reductions in the U.S. trade deficit should add further upward momentum to the dollar, easily driving it above 100 yen," a senior German bank dealer said.

But a market economist at one of Japan's major city banks said the trade deficit with Japan may actually show an increase, which could induce dollar sales, as most operators are still long in dollars.

In early afternoon, a trust bank was seen buying the mark against the yen, which hurt the yen against the dollar.

A Japanese bank trader in Singapore said operators were selling the dollar against the mark but good support was seen at 1.4720, the New York overnight low.

"There were good offers in the morning for dollar/mark at 1.4820, and when it broke at 1.4770, more selling was seen," he said.-Reuter