The dollar steadied a cent above this month's record low against the euro on Wednesday and shuttled in a tight range against the yen as trade dwindled ahead of year-end festivities. A rise in Tokyo's stock market helped the yen shrug off news of a sharp decline in Japan's trade surplus and a fall in the service sector activity.
Exports have been the main engine of Japan's two-year-old economic recovery but external demand became a negative contributor to gross domestic product for the first time in eight quarters in the three months to September.
"Japan's trade surplus was disappointing, but the figures could also reflect rising imports which would signal domestic demand is gathering momentum," said Carsten Fritsch, currency strategist at Commerzbank in Frankfurt. "The market did not react much."
Japan's trade surplus fell to 602 billion yen in November, down nearly 40 percent from the same month a year ago and lower than forecast. The dollar stood at 104.28 yen at 0905 GMT, barely changed from late New York levels. Against the euro, the dollar was steady at $1.3370, a cent above its record low hit earlier this month.
The euro showed little reaction to data showing investments flowed out of the euro zone in October, while the current account surplus widened to 1.1 billion euros.
Sterling was steady ahead of the release of minutes of the Bank of England's policy meeting held two weeks ago.
Britain's central bank left interest rates unchanged at 4.75 percent at that meeting and many analysts believe rates have now peaked for the current cycle.
Minutes of the Bank of Japan's November board meeting showed members reckoned exports would resume their recovery and that overseas economies would keep growing.
Japan's central bank also said it would monitor exchange rates and their impact on the economy.
Dealers said currencies were likely to remain in tight ranges until the end of the year, but many predicted further dollar weakness going into 2005.
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