The FINANCIAL -- The dollar was drifting lower against the yen in Asia trade on May 29, with some investors locking in profits ahead of the weekend following this week's high-profile rally, according to Nasdaq.
Around 0450 GMT, the dollar was at Y123.77, compared with Y123.95 late on May 28 in New York.
The greenback ratcheted down from its earlier levels, finding support around Y123.60 midday. But the level was still much higher than the Y121.50 mark it was hovering around at the start of the week. At one point in the rally, the dollar touched Y124.46, its highest since Dec. 5, 2002.
"After running up so quickly, there is a sense (among market players) that the uptick was excessive, so this enables the dollar to take a breather," said Yuzo Sakai, manager of forex business promotion at Tokyo Forex & Ueda Harlow.
A mild adjustment like this will also be good for the dollar before its tries to push upward again toward Y125 next week, said Mr. Sakai.
The dollar's upside was already capped overnight, following comments by Japanese finance minister Taro Aso, who told reporters at a Group of Seven meeting in Germany that recent yen moves were "rough."
Weaker stocks elsewhere in Asia, data showing Japan's inflation slid back to zero and moves to offload dollars by exporters were among other factors putting selling pressure on the greenback.
But the dollar's solid downside support suggests appetite remains strong among Japanese institutional and corporate investors to buy the dollar on dips.
Investors will now switch their attention to U.S. economic data including revised gross domestic product data out later Friday to see if the economy actually contracted in the January-March quarter.
Many market participants are betting that the dollar will appreciate further if expectations of diverging monetary policy in the U.S. and Japan continue to grow.
In other currency trade, the euro was at $1.0954 from $1.0949, while the common currency was at Y135.60 from Y135.70.
The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was down 0.09% at 87.24.