Tokyo - The dollar rebounded in Asia on Friday ahead of a US Federal Reserve policy meeting next week, while buying sentiment was also boosted by diplomatic efforts to avert a US military strike in Syria.
The greenback fetched 99.75 yen in morning trade, up from 99.47 yen in New York, but still below the 100-yen mark seen on Wednesday.
The euro bought 132.48 yen from 132.33 yen and $1.3279 against $1.3298 following a weak report on European industrial production.
The Fed will next week hold a two-day policy meeting to decide on the next move for its $85-billion-a-month bond-buying scheme.
Most analysts expect it to begin winding down this month as the US economy strengthens, although last week's below-forecast jobs figures suggest it will only reduce its bond purchases by a small amount.
US retail sales will be released later Friday and a strong result could further bolster the case for immediate action.
“The market has started to chew with the idea that maybe the Fed, while still tapering, may also introduce another concept that calms the market,” Shahab Jalinoos, a currency strategist at UBS, told Dow Jones Newswires.
“As long as there's that discussion, that's something that - for the time being - can weigh on the dollar.”
Credit Agricole added that “this element of caution is likely to stay until the crucial decision on whether to start tapering, and could be amplified if something dramatic happens regarding the ongoing Syria negotiations”.
US Secretary of State John Kerry and his Russian counterpart are holding talks in Geneva aimed at getting the Syrian regime to give up its chemical weapons, and so avoid an American military strike.
Damascus on Thursday said it would sign up to the global convention banning chemical weapons after Russia proposed a plan to put its toxic arsenal under international control
The European single currency came under pressure after a report showed eurozone factory output fell sharply in July to its lowest level in more than three years, raising doubts about the bloc's nascent recovery.
The data “put a serious dent in hopes that the tentative recovery under way in the region's economy will have gathered further momentum in the current quarter”, said London-based Capital Economics. - AFP