Dollar gains on yen in Asia after stocks rebound

TOKYO (AFP) - The dollar edged up against the yen in Asian trade Friday as a rebound in global share prices helped to calm jittery currency markets, dealers said.

They said the euro held on to gains made after European Central Bank (ECB) president Jean-Claude Trichet hinted strongly that the ECB's key interest rates would be raised in September.
Players were turning their attention to key US payrolls data due later in the day, with investors hoping for some good news after recent gloom sparked by US housing market woes.
The dollar rose to 119.29 yen in Tokyo morning trade from 119.19 late Thursday in New York.
The euro was flat at 1.3703 dollars and slightly firmer at 163.41 yen after 163.35.
The market was becoming slightly less risk averse as reflected in higher share prices and a stronger dollar against the yen, said Masaki Fukui, senior market economist at Mizuho Corporate Bank.
Wall Street closed higher Thursday on the back of positive company news but dealers said it was too early to call a bottom to the recent slump given worries about a credit crunch spreading to the broader economy.
"The sub-prime problem is deeply-rooted and amid continuing uncertainty about the outlook, investors cannot be optimistic. They are wary of any bad news, which they will be very sensitive to," Fukui added.
Fears about contagion from the US mortgage problems have shaken global equity markets, boosting the yen which had previously been sold by investors buying higher yielding currencies.
The euro gained slightly against the dollar in US trade after ECB chief Trichet warned "strong vigilance" was needed against inflation, cementing expectations of a quarter rate hike to 4.25 percent in September.
The comments came after the ECB kept its benchmark lending rate steady at 4.0 percent on Thursday as widely expected.
Commonwealth Bank senior economist Michael Workman said the ECB's continued concern over inflation suggests eurozone rates could rise beyond 4.25 percent.
But he said recent instability in financial markets had clouded the outlook for monetary policy.
"A consequence of the increased uncertainty is that the ECB is likely to take more time to assess the data going forward before deciding whether more tightening is necessary," Workman said.
Players were waiting for the key US employment report due out later Friday, although a solid result might provide only limited support for the dollar given the deep concern about the US mortgage problems, dealers said.
"Investors will likely react more strongly to a weaker-than-expected result than to a strong one," said Mizuho's Fukui.
Next week's meeting of the US Federal Open Market Committee is also coming into focus although interest rates are expected to be left unchanged at 5.25 percent for now.
"Although the market believes a rate cut is necessary to help ease the sub-prime market-related crisis, the Fed shows no" sign it is moving in that direction, said Fukui.