Dollar dips in Asian markets on profit-taking

The dollar eased back in Asia yesterday from recent highs against the euro and the yen as traders locked in recent gains while waiting for fresh economic data, dealers said. The dollar briefly slipped below the key 110-yen level before rebounding to 110.14 in Tokyo afternoon trade, down from 110.48 in New York on Friday.

The euro rose to $1.4751 from $1.4685. The euro firmed to 162.44 yen from 162.27.

Investors sold the greenback to take profits on its recent rise while exporters bought yen to repatriate their overseas earnings, said Sumitomo Trust Bank chief forex strategist Saburo Matsumoto.

"Sentiment towards European growth has been steadily deteriorating, putting downward pressure on the euro," said Matsumoto. Players are now focused on whether the euro will test the psychologically important level of $1.45, he added.

The dollar recently has risen to a six-month peak against the euro and to its highest level since January against the yen on worries that the fallout from the US financial crisis is spreading to other major economies.

Markets were looking ahead to the results of the ZEW survey of German business confidence due today, amid growing concerns about the health of the eurozone economies. The greenback has been buoyed by growing speculation that the European Central Bank could begin cutting interest rates next year to boost the eurozone economy, which shrank by 0.2 per cent in the second quarter.

Falling commodity prices and a rise in US industrial output in July gave an additional boost to the US currency, dealers said.

Against regional Asian currencies, the dollar edged up to 1,044.55 South Korean won from 1,039.70 on Friday, to 33.84 Thai baht from 33.77, to 9,210 Indonesian rupiah from 9,190 and to 31.41 Taiwan dollars from 31.36.