TOKYO, Aug 7 (AFP): The dollar firmed Monday against the yen on short covering ahead of a key US Federal Reserve meeting which many dealers expect will result in a halt to its interest rate hike campaign.
The dollar, which fell to the intraday low of 114.17 in early trade, gradually trimmed losses and returned to positive territory following Friday's steep declines on weaker-than- expected US jobs data.
The dollar stood at 114.53 yen in afternoon trade, compared with 114.43 yen in New York Friday.
Activity in Tokyo has been generally cautious and slow ahead of the US Federal Reserve meeting, which is largely expected to stop its rate hikes, said Masahi Hashimoto, analyst at Bank of Tokyo Mitsubishi UFJ.
"If the US Fed does decide to increase, this is likely to surprise the market and trigger some buy-back of the dollar," hence the short-covering, he said.
The euro was 1.2878 dollars, nearly flat from 1.2874 dollars in New York.
Against the yen, the single European unit was 147.41, little changed from 147.30 yen in New York.
Speculation that the Federal Reserve will stop its rate hikes was fuelled Friday by the announcement of weaker than expected July jobs data.
National Australia Bank strategists said the August federal funds futures are pricing in only a 16 per cent chance that the Federal Reserve will hike interest rates Tuesday.
The dollar fell against other Asian currencies.