NEW YORK, Sept 27: The dollar slipped modestly against the yen on Friday, failing to garner sustained support from veiled threats of yen-weakening intervention by Japanese officials.

The possibility of such action is likely to remain currency traders’ key preoccupation next week, analysts said.

Against most other major counterparts the dollar flitted in narrow ranges, after a mixed bag of data failed to lend clear direction. The greenback mostly weathered the descent of US stock markets.

Late Friday afternoon in New York, the euro was nearly flat on the day at $1.1474. Against the yen, the dollar dipped 0.3 percent to 111.83 yen. Against the Swiss franc the dollar was at 1.3431 francs, nearly unchanged. The pound was nearly unchanged at $1.6581.

Everybody is trying to figure out on the yen, what impact (Japan’s) fiscal half year end is going to have and whether the BoJ will intervene after that or not, said Lara Rhame, senior economist with Brown Brothers Harriman in New York.

The end-September fiscal half year mark tends to coincide with repatriation of funds into yen by Japanese companies as they sell some foreign assets for accounting reasons.

On Friday, the dollar nestled in a fairly snug range near 112 yen, after having fallen to three-year lows below 111 earlier in the week. The greenback suffered against the yen this week after a call from the Group of Seven major industrialized nations for more flexibility in exchange rates.

FX traders took the G7 statement as a call on Japan and China to stop intentionally weakening their currencies to stimulate exports. Many traders also wondered if US support for the G7 statement may have been a departure from the strong dollar policy.

The G7 ... seems to have been overreacted to, said Patrick Fearon, economist at AG Edwards & Sons in St. Louis. The G7 statement was just a statement. It’s not at all clear that China or Japan would respond to it significantly any time soon.

Speaking in New York, Bank of Japan Deputy Governor Toshiro Muto said exchange rate stability remains an important goal for Japan, in the wake of the G7 statement. He added that Japan was ready to act in the event of excessive foreign exchange market moves, which pushed the dollar briefly higher, said Rhame.

Earlier, Japanese Economics and Financial Services Minister Heizo Takenaka said the yen’s strength was not hurting Japan’s economy for now. But Finance Minister Sadakazu Tanigaki and senior Finance Ministry official Hiroshi Watanabe warned that currency intervention remained an option.

At the start of the US trading day, the dollar edged higher after the US Commerce Department reported that seasonally adjusted Gross Domestic Product for the second quarter was 3.3 per cent, slightly higher than an expected 3.1 per cent.

This should lend some support to the dollar, but not an immediate knee-jerk reaction, said Lauren Germain, currency strategist at Banc of America Securities in New York. It is a positive for growth going forward.

A University of Michigan survey showed consumer sentiment declined in September to an index reading of 87.7, down from 89.3 in August and below forecasts of 88.5.

The University of Michigan (consumer sentiment) number was weaker than expected and the dollar weakened, said Michael Malpede, currency analyst at Refco in Chicago. I think narrow range trade is probably in order.

Looking ahead to next week, investors will focus most of their attention on next Friday’s US employment report, as well as manufacturing data from the Institute for Supply Management.

The big concern is that ISM is going to look good ... and the jobs data is going to be a big disappointment, said Rhame. —Reuters