Yen recoups some losses in Asia

The yen recouped some of the losses it made after Standard & Poor's cut Japan's credit rating by a notch, while the euro slipped from two-month highs on Friday as players took profits from its recent rally. The euro's hefty gains from a four-month low hit less than three weeks ago suggested it was ripe for profit-taking, but a mounting number of warnings on inflation by eurozone policy-makers is seen supporting the currency for now.
The dollar slipped to 82.70 yen from around 82.90 yen in late US trade, after initially rallying to as high as 83.22 yen on Thursday. "Although Japan has a huge fiscal problem, its debt is mostly financed domestically and the Japanese bond market is stable after the downgrade. So I don't think the downgrade will lead to continued selling in the yen," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp.
In the currency market, the dollar/yen pair was overwhelmed by selling by Japanese exporters as well as speculative accounts that were quickly taking profits from the greenback's jump. The dollar's quick retreat only cemented expectations among traders that its narrow 82.00-83.50 yen trading band will hold for now.
The yen also bounced against the euro, which ran into profit-taking after it hit a two-month peak of 114.02 yen on Thursday, which marked a gain of 6.7 percent from a three-month low of 108.63 yen set on January 10. The euro last traded at 113.35 yen, down 0.5 percent on the day.
Against the dollar, the single currency fell 0.2 percent, with market participants including an Asian sovereign player said to be taking profits in the pair following its 7.0 percent rise from a four-month trough marked earlier this month. The euro slipped to around $1.3710 from around $1.3730 in late US trade.
It went as high as $1.3760 on Thursday after European Central Bank policy-maker Lorenzo Bini Smaghi warned of a rising tide of imported inflation. The index stood at 77.786, having fallen to 77.594 on Thursday, a level last seen in November. The Aussie dollar slipped 0.1 percent to $0.9910, clinging above its 90-day moving average at around $0.9894.