Dollar firms ahead of G8 talks, Bernanke speech

The dollar firmed in Asian trade on Monday as the market waited to see if leaders of the world's industrialised nations sent a message to support the sliding greenback at the G8 summit, analysts said.

Market players were also treading cautiously ahead of speeches later this week by US monetary officials, they said.

The dollar was changing hands at 107.04 yen in Tokyo in late morning trade, up from 106.63 in Europe late Friday.

The euro bought 1.5642 dollars, down from 1.57 dollars, while holding steady at 167.41 yen. The US markets were closed on Friday for the Independence Day holiday.

Leaders of the Group of Eight (G8) richest nations are starting talks Monday in the northern Japanese town of Toyako.

US President George W. Bush on Sunday reaffirmed the United States' "strong dollar" policy, saying the US economy's fundamental strength would ultimately support the flagging currency.

"The US believes in a strong dollar policy and believes that the strength of our economy will be reflected in the dollar," he said on the eve of the summit.

Osamu Takashima, chief currency analyst at Bank of Tokyo-Mitsubishi UFJ, said even though Bush was only reflecting the official US position, "it bears importance that he repeated the policy on a summit occasion".

"We believe nothing surprising will come out from the summit.

"We know it would be historical, but it is unlikely that the leaders would say (in a summit statement) they are united to prevent a weak dollar. Nonetheless we have to be careful," Takashima said.

There also is caution in the market as senior monetary officials are to speak later this week, including congressional testimony by Federal Reserve chairman Ben Bernanke on Thursday, he said.