Thursday March 27, 06:38 AM
Dollar extends losses against yen
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TOKYO (AFP) - The dollar fell further against the yen in Asian trade on Thursday after soft US economic data eroded recent optimism that the fallout from the subprime loan crisis might be easing, dealers said.
But the greenback recovered some ground against the euro after tumbling in overseas trade following an unexpectedly strong report on eurozone business confidence.
The market was waiting for final fourth-quarter US gross domestic product figures due later Thursday and consumer spending data for February on Friday.
The dollar was at 98.99 yen in Tokyo afternoon trade, down from 99.11 in New York late Wednesday.
The euro fell to 1.5799 dollars from 1.5845 and to 156.44 yen from 157.08.
"The problem is really the US economy. The dollar is still on a downtrend," said David Mann, a currency strategist at Standard Chartered Bank.
Overnight, the US government reported an unexpected 1.7 percent decline in durable goods orders in February and a 1.8 percent fall in new home sales.
The data added to fears that the world's biggest economy may slip into a recession even after a string of interest rate cuts and liquidity injections into the financial system by the US Federal Reserve.
"The data reinforced concerns about the US economy after the Fed action, including the rescue of Bear Stearns (NYSE: BSC - news) through JPMorgan, which had brought some relief to the market," said Traders Securities analyst Kanako Oikawa.
Markets are unsure where the dollar is now heading amid uncertainty about whether the worst of the recent credit crunch that has roiled global markets is yet over.
"Although the dollar resumed its downtrend following a set of weak economic data, it is still difficult to judge whether the recent rebound of the dollar has come to an end, or whether the fall is a blip," said Chuo Mitsui & Trust Banking Co Ltd forex dealer Yosuke Hosokawa.
The euro got a boost after a business climate index from Germany's Ifo institute rose to 104.8 points in March from 104.1 in February, surprising analysts who had expected a fall to 103.4 points.
The report helped lift the euro up towards its March 17 all-time high of 1.5905 dollars.
Meanwhile European Central Bank chief Jean-Claude Trichet, speaking to the European Parliament, suggested that eurozone interest rates would likely remain on hold while inflation is a risk.
"Trichet's remarks showed that the ECB's main concern is price stability which allayed speculation of a rate cut," said Oikawa.
"Meanwhile the Federal Reserve is likely to make another rate cut, or at least keep rates at current levels," she said.
The Fed has now slashed its federal funds rate by 300 basis points from 5.25 percent last September, reducing the appeal of certain US assets compared with higher-yield assets in other countries.
Dealers said the dollar may find some downside support against the yen owing to concern that the Bank of Japan's closely watched Tankan survey will show a sharp deterioration in business sentiment next week.
Against regional currencies, the dollar rose to 987.65 South Korean won in late Asian trade from 985.3 a day earlier, to 30.12 Taiwan dollars from 29.98 and to 9,210.5 Indonesian rupiah from 9,193.0.
It (Frankfurt: A0MLX5 - news) rose to 31.40 Thai baht from 31.39 and to 41.78 Philippine pesos from 41.61, but eased to 1.3794 Singapore dollars from 1.3798.
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