The dollar edged down in Asian trading on Friday, taking a breather from this week's rally that brought it to its highest levels against the yen since 2002 on growing expectations that the US Federal Reserve would raise interest rates this year. Market participants said the dollar's recent ascent had caught some investors off guard and their efforts to cover their positions was likely to keep the dollar supported, even with possible risks from US jobs data at the end of next week.
"Japanese importers are far behind to cover their exposure, and therefore, on any dip, they've got to buy the dollar," said Kaneo Ogino, director at Global-info Co in Tokyo, a foreign exchange research firm. "I think even ahead of the US nonfarm payrolls report next week, some want to keep their dollar-long positions," he said. A warning from Japanese Finance Minister Taro Aso overnight was a factor behind the dollar's move away from Thursday's high of 124.46 yen, although it remained well above a low of 118.88 yen in mid-May. It last stood at 123.81 yen, down about 0.1 percent on the day "The current yen weakening in the past few days has been rough. I will closely monitor market moves," Aso told reporters on the sidelines of a gathering of finance ministers and central bank chiefs of the Group of Seven countries in Dresden, Germany. But Japanese Economics Minister Akira Amari said on Friday the pace of yen declines could not necessarily be described as excessive.
At the Dresden meeting, the head of the International Monetary Fund warned that Greece could fall out of the euro zone as it struggled to sort out its debt problems, which is adding to concern about the patchiness of the global economic recovery. The euro edged slightly higher on the day, although mixed signals on progress in negotiations over Greece continued to weigh on it. Greece's government intended to reach an agreement with its lenders on a cash-for-reforms deal by Sunday, its spokesman said on Thursday, brushing off comments from eurozone officials suggesting a deal was far from imminent.
The euro traded at $1.0950, up slightly on the day and holding above a one-month low of $1.0819 touched on Wednesday. An index tracking the dollar against a basket of six major currencies was flat at 96.998, still on track for a weekly rise. Later in the session, revised growth figures are expected to underscore that the US economy stalled in the first quarter of this year. A Reuters poll last week forecast US GDP numbers would be massively revised down and show a 0.7 percent contraction in the first three months of this year.
The Australian dollar was up about 0.2 percent on the day at $0.7663, but not far from a six-week nadir of $0.7618 plumbed in the previous session. The Reserve Bank of Australia will meet next Tuesday and is expected to hold its policy rate steady at 2 percent, but a weak business investment survey increased speculation that more easing was likely later this year.
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