The dollar drifted lower against the yen in Asia trade Monday but stayed in a tight range, with a lack of fresh trading cues preventing the greenback from going further upward after last week’s rally. The dollar USDJPY, +0.02% was at ¥124.19, compared with ¥124.18 late Friday in New York. After staying steady above the ¥124-mark most of the session, the greenback briefly broke below that threshold midday, hitting as low as ¥123.94 amid a lack of trading incentives. The dollar rallied last week and at one point hit ¥124.46, its highest since Dec. 5, 2002. “We are going to have a slew of economic data and the market is switching to a mood where it all depends on what comes out,� said Toshiyuki Umekawa, senior vice president of forex division at Mizuho Bank, adding that the dollar’s further advance toward the ¥125-level is possible if the data prove encouraging. Among potentially market moving events and data are such U.S. indicators as the ISM manufacturing report for May scheduled to come out later Monday and the jobs data for May slated on Friday. Many expect the dollar to broadly appreciate, as the U.S. economy maintains a faster growth rate than that of Europe and Japan. Market participants pointed out a quick build-up in yen short positions as of last week in U.S. Commodity Futures Trading Commission’s international monetary market, in a showcase of how hedge funds and other money managers were betting that the dollar would appreciate further on diverging monetary policy in the U.S. and Japan continue to grow. “There is a higher possibility than last week that the dollar may see an adjustment, especially after the rapid built-up in yen-short positions,� said Koji Fukaya, FPG Securities chief executive in a note. But Fukaya said the dollar’s downturn would be only temporarily and very unlikely to see the dollar fall below the ¥120-mark. “Judging logically from the incentives coming up, there continues to be no change in a stronger dollar and a weaker yen,� said Fukaya. The Australian dollar AUDUSD, +0.0785% fell to $0.7628 and AUDJPY, +0.09% ¥94.87, following China’s manufacturing activity which continued to deteriorate in May. The Aussie later bounced back to $0.7659 and ¥94.98, respectively. The HSBC China Manufacturing Purchasing Managers Index rose to a final reading of 49.2 in May from 48.9 in April, but the result was in negative territory for the third month in a row. Anything below the 50 mark indicates a contraction. Among other currency pairs, the euro EURUSD, -0.7733% was at $1.0960 from $1.0992, while the common currency EURJPY, -0.72% was at ¥135.92 from ¥136.45. The WSJ Dollar Index BUXX, +0.38% a measure of the dollar against a basket of major currencies, was up 0.06% at 87.33.

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