The yen was buoyant on Thursday, briefly rising near a four-year peak against the dollar on a broad improvement in Japanese corporate sentiment.
The closely watched quarterly "tankan" survey by the Bank of Japan (BOJ) showed that the main diffusion index for big manufacturers came in at plus 12, the highest since June 1997 and the fourth straight quarter of improvement.
But dealers trod carefully at the start of the new financial year in Japan as they awaited Friday's key US jobs data and, to some extent, the European Central Bank's rate decision later in the day.
"A round of tankan-inspired yen buying cooled down and people started preparing for any surprise from US payrolls data like what happened last month," said Kota Kimura, assistant manager at Shinkin Central Bank.
Disappointing US non-farm payroll figures released in early March sent the dollar reeling as the data was seen lessening the chances of the US Federal Reserve hiking interest rates sooner than later.
Analysts believe that Japan then intervened to help push the dollar above 112 yen.
On Thursday, the dollar slipped to a low of 103.85 yen after the tankan survey was released but recovered to around 104.15 yen as the key Nikkei stock average trimmed gains.
The dollar hit a four-year low of 103.40 yen on Wednesday.
The euro was down 0.6 percent at 127.55 yen.
Still, many analysts were confident that it was a matter of time before the yen breaks 100 per dollar and felt that foreign exchange intervention by Japan would not be a serious hurdle to pushing up the currency.
"Japan's economic fundamentals are obviously good with the yen looking set to move towards the 100 per dollar level, brushing aside any yen-selling intervention," said Kouki Muroi, deputy manager at Aozora Bank's forex trading group.
Of the tankan, yen bulls were heartened to see that brightening corporate sentiment in Japan was spreading to non-manufacturing and smaller firms.
Many dealers were also struck by the average dollar/yen rate that Japanese companies expected for the new financial year that kicked off on Thursday.
Large manufacturers forecast an average dollar rate of 108.43 yen in fiscal 2004/05, versus the current level around 104.15.
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