Dollar falls back against yen

TOKYO: The dollar eased against the yen in Asia Thursday as positive sentiment driven by upbeat US data and an improved outlook from the Federal Reserve was tempered by worries over Middle East stability.

The dollar traded at 83.56 yen in Tokyo compared with 83.67 in New York late Wednesday.

The euro was flat at $1.3571, while the European currency eased to 113.39 yen from 113.50.

"The dollar pulled back after levels just below 84 yen proved top-heavy in New York trading," said Yuichiro Harada, dealer at Mizuho Corporate Bank.

The unit climbed to a two-month high of 83.98 yen on Wednesday as stronger-than-expected US housing data helped lift New York stocks and Treasury yields, dealers said.

Official data showed construction of new homes in the United States grew 14.6 percent in January, beating expectations.

The Federal Reserve's minutes from a January policy-setting meeting released Wednesday were also upbeat, describing increased consumer spending and while the bank raised its forecast for 2011 economic growth to 3.4-3.9 percent.

Still, the US central bank said it remained concerned about high unemployment and the depressed construction industry.

Israel's statements that it viewed the expected passage of two Iranian naval vessels through the Suez Canal to the Mediterranean as a "provocation" also hung over markets, although no major forex impact was seen.

That news came on the back of reports of more anti-government protests in Iran, Libya and Bahrain, all of which helped fuel sharply higher oil prices.

Market participants are focused on US economic indicators to be released later in the global day, including weekly jobless claims.

"The main scenario is that (the dollar) will test a breach of 84 (yen)," Sumino Kamei, senior analyst at Bank of Tokyo-Mitsubishi UFJ, told Dow Jones Newswires.

The weekly jobless claims showed a strong outcome last week and served as a catalyst for the dollar's ascent, Kamei noted.

The pound rose slightly from earlier falls after the Bank of England ruled out a double-dip recession but warned about weaker-than-expected economic growth. It fetched $1.6104 from $1.6094 Wednesday.

The US dollar was softer against most other Asian currencies.

It eased to Sg$1.2785 from Sg$1.2796 on Wednesday, to 1,116.75 Korean won from 1,119.50 and to 43.42 Philippine pesos from 43.61.

The currency fell to 30.62 Thai baht from 30.68, to Tw$29.39 from Tw$29.40 and to 8,879.25 Indonesian rupiah from 8,896.00.