TOKYO: The dollar rebounded against the yen in Asia on Tuesday as markets eye key US economic data for signs of a recovery in the world's largest economy.
The greenback bought 97.43 yen in afternoon Tokyo trade, strengthening from 96.90 yen in New York on Monday.
The euro was stronger at $1.3302 and 129.62 yen, compared with $1.3299 and 128.84 yen in US trading.
The US unit's rise on the yen came as the Nikkei stock index soared 2.57 percent by the close, with buoyant sentiment upping investors' risk sentiment which supports the dollar.
Dollar-yen trading and the local stock market are closely intertwined as the value of the yen is closely linked to the profitability of Japanese exporters.
The dollar has been weak since mid-July, and that was reinforced by a disappointing US jobs report earlier this month which suggested the Federal Reserve might delay plans to scale back its huge bond-buying programme, known as quantitative easing.
Markets are keeping a close eye on a string of data this week, including retail sales data later Tuesday, for clues about the state of the world's largest economy.
"If the results come out strong, we could see the dollar rising toward 98 yen," Junichi Ishikawa, market analyst at IG Securities in Tokyo, told Dow Jones Newswires.
A pull back on the Fed programme which largely depends on a recovery in the US economy would mean fewer dollars in the financial system, boosting demand and the greenback's value.
Currency markets also reacted to a report in the leading Nikkei business daily which said Japanese Prime Minister Shinzo Abe was reviewing a possible corporate tax rate cut in a bid to stoke growth and offset the impact of a national sales tax hike.
Tokyo is mulling lifting Japan's consumption tax in a bid to bring down a debt pile that is the worst in the industrialised world at more than twice the size of the economy.
Weaker-than-expected GDP data for the second quarter on Monday had nervous investors speculating that Abe may hold off the tax rise.
Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said going ahead with the tax rise was a positive for the dollar-yen pair as it boosts investors' appetite for risk. The yen is considered a safe-haven currency in times of uncertainty.
The dollar was higher against other Asia-Pacific currencies.
It firmed to 43.72 Philippine pesos from 43.66 pesos the previous day, to 1,116.45 South Korean won from 1,113.19 won, to Sg$1.2629 from Sg$1.2609 and to Tw$29.95 from Tw$29.94.
The greenback also strengthened to 61.42 Indian rupees from 60.73 rupees, to 31.23 Thai baht from 31.17 baht and to 10,308 Indonesian rupiah from 10,302 rupiah.
The Australian dollar slipped to 91.32 US cents from 91.76 cents.
The Chinese yuan fetched 15.92 yen from 15.79 yen.
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