Dollar takes breather in Asian trade

The dollar was steady in Asian trade on Monday as investors sat on their hands ahead of a fresh batch of US economic data, dealers said.

The dollar was quoted at 105.42 yen in Tokyo morning trade, down slightly from 105.51 in New York late Friday.

The euro slipped to 1.5534 dollars from 1.5553 and to 163.81 yen from 164.14.

The Tokyo market looks set for a quiet day's trade, said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.

"Since last week, the dollar has been gaining ground while the yen slowly headed lower," he said.

Whether the greenback could continue to advance would depend on the results of a survey of US manufacturing activity by the Institute of Supply Management due later Monday, as well as Friday's key monthly US jobs report, he said.

Dealers were keeping a close watch on world oil prices following the official start of the Atlantic hurricane season, traders said.

"The persistent and strong correlation between the euro-dollar (exchange rate) and oil prices makes the Atlantic Basin's 2008 hurricane season more important for forex than usual," Barclays Capital analysts wrote in a note to clients.

"Traders will be watching hurricane reports and in particular any risk of a major hurricane sweeping up into the Mexican Gulf and disrupting oil supplies," they added.

The US Federal Reserve has expressed concern about inflationary pressures in recent months as world oil prices have rocketed to record highs.

The Fed has slashed interest rates this year in a bid to boost US economic momentum, but its rate cuts have weighed on the dollar as investors typically prefer to hold currencies in countries with higher returns.

The euro has gained momentum against the dollar in recent months as the European Central Bank has opted not to cut eurozone rates, despite rising inflation worries in Europe.