Source AP ©

Dollar higher against yen in Asian trading on lower expectations of U.S. rate cut

The dollar rose against the yen Wednesday in Asia on receding expectations of a near-term U.S. rate cut and worse-than-expected Japanese machinery orders.

The dollar was trading at 118.98 yen midafternoon, up from 118.69 yen late Tuesday in New York. The euro fell to US$1.3750 from US$1.3763.

Asian fund players and Japanese investors bought the dollar to cover positions after the U.S. Federal Open Market Committee said in a statement Tuesday that inflation rather than market volatility remains its major concern, suggesting it won't lower interest rate rates just to calm markets.

Meanwhile, Japan's machinery orders dropped 10.4 percent in June from the previous month. Analysts had forecast a 1.8-percent decline. Machinery orders are a key leading indicator of corporate capital spending.

But the dollar wasn't able to rise much because players remain worried about how U.S. credit market woes might hurt the currency. Selling by Japanese exporters when the dollar rose also weighed on the U.S. unit, traders said.

"Subprime mortgage market problems haven't disappeared yet," said Shuichi Kanehira, senior trader at Mizuho Corporate Bank.

Against other regional currencies, the dollar was mixed, rising to 7.8294 Hong Kong dollar from 7.8290 the previous day, and to 924.0 South Korean won from 923.0. It fell to 1.5133 Singapore dollars from 1.5147.