The dollar was slightly higher against the yen in Asian trade Tuesday, with many investors avoiding taking strong positions before the next round of U.S. economic data. Around 6 a.m. London time, the dollar USDJPY, -0.12% was at ¥124.48 from ¥124.39 late Monday in New York. The U.S. currency EURUSD, -0.0090% was also stronger against the euro, which was down at $1.1054 midday from $1.1080. The WSJ Dollar Index BUXX, -0.11% a measure of the dollar against a basket of major currencies, was up 0.10% at 88.88. There was no massive buying and selling in particular from Japanese corporate and institutional investors in the currency market, which was already facing thin liquidity with a reduced number of participants soon after Japan’s traditional summer holiday season. “We clearly lack fresh trading cues,� said Yuzo Sakai, manager of FX business promotion at Tokyo Forex & Ueda Harlow. With tension diminishing in the wake of China’s decision last week to devalue its currency, the market is shifting focus to U.S. economic indicators as it looks for signals that the Federal Reserve has the ammunition it needs to raise rates. Investors are waiting for July U.S. residential housing construction data set for release later Tuesday as well as consumer price index data for July and the release of minutes from the latest policy-setting Federal Open Market Committee meeting, both set for Wednesday. Sakai said if the CPI data and FOMC minutes offer investors clearer signals that the Fed is closer to deciding to raise rates next month, the dollar may try its upside against the yen, possibly to ¥125.50. He said the recent fall-off in oil prices remained a source of concern. A further decline would bode ill for resources-linked currencies and may also help lower expectations for a Fed rate increase given already low inflation in the U.S. and globally.

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