Previous session overview

The dollar slipped against the yen in morning trading Friday after U.S. gross domestic product data showed scant signs of inflationary pressure, putting downward pressure on U.S. yields.

GDP in the U.S. grew by 2.4% in the second quarter, slightly below the 2.5% expected by economists. Month-end trading contributed to volatile activity immediately after the data, with the euro gaining ground against the dollar and then surrendering it. The euro's inability to rally decisively reflected continued underlying concern about risk-related pressures on the common currency.

USDJPY has returned above JPY86.00 after a brief dip to JPY85.95 in the wake of 2Q GDP data and govt's acknowledgement that recession had been worse than first thought. USDJPY now trades at JPY86.25 from JPY86.96. EURUSD has returned to pre-data levels, still down on the day at USD1.3030 from USD1.3090 late Thu. EURJPY at JPY112.25 from JPY113.77 and GBPUSD traded at USD1.5595 from USD1.5617.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 81.741 from 81.599.

Market expectation

Analysts said Friday's report follows a string of recent weak data from the United States that has weighed broadly on the dollar. They added the data may also hurt demand for perceived riskier assets, favoring investments in currencies such as the yen and the Swiss franc.

Traders and analyst said they do not seriously expect Japanese authorities to intervene to stem the yen's rise until it goes beyond 84.81 yen to the dollar hit in November 2009.