US DOLLAR STEADY IN VOLATILE TRADE

US DOLLAR STEADY IN VOLATILE TRADE

The dollar stood little changed in late trading Thursday against the deutsche mark and the yen, but trading was volatile due to positioning for the Japanese fiscal mid-year and ongoing concerns over the European Monetary Union.

Dealers said players were establishing short positions in dollar/yen and selling the mark/yen cross in anticipation of large demand for yen after the fixing in Tokyo Friday of the Japanese fiscal mid-year."People are trying to speculate what is going to happen after the Tokyo fixing," said Belal Khan, senior customer dealer at Bank of Tokyo in New York. "The logic in the market was the Bank of Japan will prop the dollar up before fixing but won't interfere with people buying yen after," he said.

Amy Smith, currency analyst at I.D.E.A. Inc. said the Bank of Japan was seeking to keep the dollar around 100 yen ahead of the fixing.

In Europe, technical factors created some early buying opportunity, with the dollar setting a double-bottom near 1.4280 marks early in the session. However, on limited optimism the dollar couldn't convincingly penetrate resistance near 1.4250 marks.

The possibility of a central bank intervention faded, but remained in the background. "Heading into the Group of Seven there is normally coordinated intervention in the past year or so. Therefore, there could be some nervousness as the meeting approaches," said one currency analyst.

A firm date for the G-7, or the group of the seven most developed economies, has not been set, but Oct. 7 is seen as a tentative date.

Analysts said the dollar is expected to ride a downward path for the rest of the week, testing lows against the mark and yen.

The greenback got hammered late last week when the Bank of Japan did not forcefully buy dollars following the release of Japan's $140 billion economic stimulus package.

"Last week's plunge set a bearish dollar outlook, but it was just too much too fast," said MMS International foreign exchange analyst Ken Boyer. "We corrected earlier this week, and now we're trying to move back toward last week's lows again."

I.D.E.A. technical analyst Ben Morden said he expects the dollar to seesaw in a range of 98.00 to 100.2 yen, with a break below 99 yen seen as a trigger point that could drag the dollar down to 98.

At 2:30 p.m., the dollar stood at 1.4223 marks, up slightly from 1.4202 at the open. It was bid at 99.68 yen, virtually unchanged from the open.