The dollar held near recent four-month lows on the euro on Friday, finding little support from Wall Street, and the yen was soft on all fronts as a result of struggling Tokyo shares.
With the data calendar fairly light on market-moving releases, traders are focusing on share markets, where there are concerns that too much good news has been discounted to see further gains in the immediate future.
Japan's Nikkei share average ended flat after a five percent fall on Thursday following on from hefty losses on Wednesday on the Dow and Nasdaq.
On Thursday the Dow edged higher, but the tech-heavy Nasdaq remained on the slide.
"Good economic news and good earnings are failing to drive the dollar higher because markets have largely absorbed the good news," said Mitul Kotecha, senior currency strategist at Credit Agricole Indosuez.
"Microsoft came out with good earnings but probably a disappointing guidance for many, which hit equities overnight and that's what's driven the dollar lower."
By 3:30 a.m. EDT the dollar was flat on the day at $1.1790 per euro, just over half a cent above a recent four-month low and 1-1/2 cents away from this year's record low.
The yen was around 0.12 percent lower at 109.66 per dollar, after dipping almost to 110 in Asian trade, and 129.31 per euro.
Key beneficiaries were higher yielding currencies such as sterling, which hit a five-year high against the dollar earlier in the day, and Canadian and Australian dollars.
POUND ON THE MOVE
Traders said the pound rose to around $1.70 in early Asian trade on Friday, the first time it has been there since October 1998 and the third consecutive day of five year highs.
Sterling was supported by prospects of an interest rate hike by the Bank of England (BOE) when its Monetary Policy Committee (MPC) meets next month.
"It is highly likely that the BOE will raise rates, and a strong reading in the growth figures will probably make them pull the trigger," said Mitsuru Sahara, foreign exchange manager at UFJ Bank in Tokyo.
"Everyone was talking about global deflationary pressure until very recently, and this could mark some sort of a turning point for the global economy and currency markets."
Against the euro the pound was steady on the day, trading in the middle of its recent range at 0.6954 pence.
Traders said British third-quarter gross domestic product (GDP), due later in the day, would have to be markedly weaker than expected to prevent the MPC from raising interest rates, given the nine-member committee came within one vote of a hike a fortnight ago.
A Reuters poll of economists predicted on average that GDP rose 0.6 percent in the third quarter, unchanged from the previous quarter.
A source told Reuters September retail sales would be up 0.6 percent on the month when they are released at 4:30 a.m. EDT. Forecasts are for a rise of 0.4 percent on the month.
The British interest rate compares with the European Central Bank's 2.0 percent refinancing rate, the Federal Reserve's 1.0 percent target for the fed funds rate and the Japanese overnight call rate of below 0.01 percent.
With the data calendar fairly light on market-moving releases, traders are focusing on share markets, where there are concerns that too much good news has been discounted to see further gains in the immediate future.
Japan's Nikkei share average ended flat after a five percent fall on Thursday following on from hefty losses on Wednesday on the Dow and Nasdaq.
On Thursday the Dow edged higher, but the tech-heavy Nasdaq remained on the slide.
"Good economic news and good earnings are failing to drive the dollar higher because markets have largely absorbed the good news," said Mitul Kotecha, senior currency strategist at Credit Agricole Indosuez.
"Microsoft came out with good earnings but probably a disappointing guidance for many, which hit equities overnight and that's what's driven the dollar lower."
By 3:30 a.m. EDT the dollar was flat on the day at $1.1790 per euro, just over half a cent above a recent four-month low and 1-1/2 cents away from this year's record low.
The yen was around 0.12 percent lower at 109.66 per dollar, after dipping almost to 110 in Asian trade, and 129.31 per euro.
Key beneficiaries were higher yielding currencies such as sterling, which hit a five-year high against the dollar earlier in the day, and Canadian and Australian dollars.
POUND ON THE MOVE
Traders said the pound rose to around $1.70 in early Asian trade on Friday, the first time it has been there since October 1998 and the third consecutive day of five year highs.
Sterling was supported by prospects of an interest rate hike by the Bank of England (BOE) when its Monetary Policy Committee (MPC) meets next month.
"It is highly likely that the BOE will raise rates, and a strong reading in the growth figures will probably make them pull the trigger," said Mitsuru Sahara, foreign exchange manager at UFJ Bank in Tokyo.
"Everyone was talking about global deflationary pressure until very recently, and this could mark some sort of a turning point for the global economy and currency markets."
Against the euro the pound was steady on the day, trading in the middle of its recent range at 0.6954 pence.
Traders said British third-quarter gross domestic product (GDP), due later in the day, would have to be markedly weaker than expected to prevent the MPC from raising interest rates, given the nine-member committee came within one vote of a hike a fortnight ago.
A Reuters poll of economists predicted on average that GDP rose 0.6 percent in the third quarter, unchanged from the previous quarter.
A source told Reuters September retail sales would be up 0.6 percent on the month when they are released at 4:30 a.m. EDT. Forecasts are for a rise of 0.4 percent on the month.
The British interest rate compares with the European Central Bank's 2.0 percent refinancing rate, the Federal Reserve's 1.0 percent target for the fed funds rate and the Japanese overnight call rate of below 0.01 percent.
3287.99
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