Dollar down against yen ahead of Bernanke speech

TOKYO (AFP) - The dollar eased back against the yen in Asian trade Tuesday as the market waited for a speech by US Federal Reserve chief Ben Bernanke and an upcoming Japanese interest rate decision, dealers said.

The Japanese currency also gained on the euro, bouncing off an all-time low as players locked in some gains from the single currency's ascent.

The dollar slipped to 123.21 yen in Tokyo morning trade from 123.37 in New York late Monday.

The euro was stable at 1.3622 dollars after 1.3625.

The single European currency retreated to 167.82 yen from 168.11, pulling back from a record high of 168.51 on Monday on profit-taking, dealers said.

The market was waiting for Bernanke speech's for a fresh lead on the central bank's assessment of the outlook for US economic growth and inflation.

"With the US economy recovering slightly (as shown by) recent employment data, players will be watching to see how hawkish he will be on inflation and growth," said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.

The United States added 132,000 jobs in June, slightly more than expected, the US government said Friday, and the two previous months' job gains figures were revised sharply upward.

The yen has come under renewed pressure as players bet that the Bank of Japan will not raise interest rates from 0.5 percent on Thursday.

Instead the market will be focusing on a remarks from BoJ governor Toshihiko Fukui at a press conference after the meeting to see if he will give any signals to support market expectations of a hike in August or September.

A robust report released Monday on Japanese machinery orders, seen as a key leading indicator of corporate capital spending, was seen as supporting the case for a quarter point BoJ rate hike to 0.75 percent sometime soon.

Japan has one of the lowest interest rates in the world, prompting Japanese investors to put their money into higher-yielding currencies like the euro and the British pound.

"The possibility of an August rate hike is high," said Matsumoto.

"The second-quarter growth figures due in August will be key to determining whether the BoJ will raise rates," he added.