By Hiroyuki Kachi 
 

The yen was almost flat against its rival currencies during Asian trade on Monday, with investors reluctant to move aggressively ahead of the monetary policy meetings in the U.S. and Japan later this week.

Around 0450 GMT, the U.S. dollar was a tad higher at Y106.28, compared with Y106.15 late Friday in New York. The euro was changing hands at Y116.63, slightly higher than Y116.50 late Friday.

The greenback briefly touched as high as Y106.74 in mid-morning trade, suggesting strong appetite among Japanese importers and other corporate players for dip buying of the dollar for regular commercial trade settlement.

But the U.S. currency ratcheted down to below Y106.50 by early afternoon, as weakness in Tokyo stocks prompted selling of the perceived safety of the yen. The Nikkei Stock Average was up 0.2% midday, after falling slightly into negative territory after the lunch break.

Investors are expected to largely sit on the sidelines before the Federal Open Market Committee on July 26-27 and the Bank of Japan's policy setting meeting on July 28-29.

"There's no aggressive buying ahead of the events this week. It seems profit taking was kicking in, as Tokyo stocks weakened," said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow.

"We would see similar moves again tomorrow," Mr. Sakai said. "But many investors seem to have been hesitant to sell (the safety of) the yen," given recent uncertainties such as a shooting in Germany last week, said Mr. Sakai.

J.P. Morgan said in a morning note that the dollar will likely follow a pattern of "buy the rumor, sell the news," against the yen.

The bank, which expects a further cut in rates and increased asset purchases by the BOJ this week, noted that when the BOJ decided to stand pat in March and June, the dollar fell 0.8% and 1.7%, respectively against the yen, following the BOJ policy decision. Most traders had expected the central bank to stand pat on both those occasions.

The bank says that the monetary action alone may not be enough to pull down the yen, particularly as Japan's trade surplus is staring to widen. Moreover, a mere conventional easing won't deliver any kind of positive surprise, it said.

According to data released Monday by the finance ministry, Japan's trade balance for June came in at a surplus of Y692.8 billion, bigger than a Y494.8 billion surplus that economists polled by The Wall Street Journal and the Nikkei had expected.

Investors shrugged off the Group of 20 finance ministers and central bankers meeting over the weekend which redoubled their commitments to use all available policy tools to boost economic growth.

The G-20 also reiterated its commitment to avoid using exchange rates to gain a competitive advantage and to consult closely on exchange-rate policy.

In other currency trade pairs, the euro was unchanged at $1.0974 from $1.0976 late Friday.

The WSJ Dollar Index, a measure of the dollar against a basket of major currencies, was up 0.03% at 88.10.

 
 
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT 
 
                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
USD/JPY Japan           106.27-28      106.12-13  +0.15   106.72   106.12 -11.65 
EUR/USD Euro            1.0973-76      1.0978-81  -0.05   1.0980   1.0953  +1.05 
GBP/USD U.K.            1.3125-27      1.3105-07  +0.15   1.3141   1.3106 -10.93 
USD/CHF Switzerland     0.9873-77      0.9869-73  +0.04   0.9896   0.9871  -1.45 
USD/CAD Canada          1.3144-49      1.3126-31  +0.14   1.3153   1.3123  -5.00 
AUD/USD Australia       0.7468-72      0.7462-66  +0.08   0.7482   0.7459  +2.51 
NZD/USD New Zealand     0.6973-79    0.6996-7002  -0.33   0.7011   0.6959  +2.09 
 
Euro Rate 
 
EUR/JPY Japan           116.61-65      116.48-52  +0.11   116.96   116.50 -10.83 
 
Source: Tullett Prebon 
 

Write to Hiroyuki Kachi at Hiroyuki.Kachi@wsj.com

(END) Dow Jones Newswires

July 25, 2016 01:46 ET (05:46 GMT)