Currencies: Mixed Messages Heard From Japan

By Dan Bernstein ,

The yen floundered through the morning session today, after some mixed messages came out of Japan, but it was lately trading up against both the dollar and euro in low-volume narrow trading.

It lately cost 124.16 yen to buy a dollar, less than the 124.64 yen per dollar it cost at yesterday's close. You'd pay 106.38 yen right now to buy a euro, down a bit from Thursday's closing price of 106.44 yen per euro.

Japanese Finance Minister Masajuro Shiokawa told reporters early this morning that the Ministry of Finance would have to consider taking steps -- implying intervention to support the yen -- if foreign exchange levels moved too rapidly. But shortly after that,

Bank of Japan

official Kazuo Ueda, speaking in Europe, said it would be acceptable for the yen to weaken through market forces. Such forces might include an indirect weakening via a central bank interest-rate cut.

The disjointed rhetoric left the yen bouncing around for much of the morning.

The yen, though, gained against the euro with this morning's release of Germany's

Ifo

Institute's business sentiment index, which fell to new two-year lows. Together with an improvement in preliminary June inflation data, the data set the stage for interest-rate cuts by the

European Central Bank

in the near future, economists say. The euro lately was up a little against the dollar, to $0.8566 from $0.8541 at last close.

Some odd news may have affected euro trading this week: The mysterious, heavily promoted "Mister Euro" was revealed to be a "talking coin" mascot, and the level of nickel in the actual coin was called a health hazard. For more, read the

full story on

TheStreet.com's

premium content site,

Real Money

.

In what traders called complicated bond trading, Australian bonds were sold off overnight for Canadian bonds, which boosted the Canadian dollar against the U.S. dollar as the Australian currency slipped. The Aussie coin fell to fresh two-week lows this morning against its U.S. counterpart, trading recently for $0.5170, down from yesterday's closing price of $0.5173. The U.S. dollar had slipped to one-week lows against the Canadian loony before bouncing back to C$1.5256 recently, up from C$1.5227 at yesterday's close.

The British pound slipped back a bit today after posting strong gains of late as it came out of the 16-year low it hit a couple weeks back. The pound was lately at $1.4138, down from $1.4155 at Thursday's close. The pound had hit the multiyear lows after the recent re-election of Britain's

Labour Party

on worries that the party would speed up a vote to join the euro.

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