US dollar buyers return on war optimism (page 2 of 2)

The step is part of measures to increase liquidity in the Japanese banking system to avert a crisis after the Nikkei fell below 8,000 levels.

Finance Minister Masajuro Shiokawa also said the government is ready to step in the market aggressively and immediately as needed. The BoJ already sold around 2 trillion yen on several occasions this year to keep the currency from strengthening.

On the last trading day, the dollar rose to 118.70 yen after talks confirmed by CNN that Iraqi officials are engaged in surrender negotiations with the Untied States. Week ahead, the market will focus on the change at the helm of the Japan's central bank.

Range for the week: 115.00 -120.00

Sterling

At the start of the week, sterling set a four-year low versus the euro and also slipped against the dollar, hit by a rising rebellion within British Prime Minister Tony Blair's government against his support for the U.S.-led attack on Iraq.

International Development Secretary Clare Short said she would resign if the country went to war with Iraq without backing of a second U.N. resolution. The announcement came after Andy Reed, a Labour member of parliament, quit his post as ministerial aide, with speculation four other could follow.

In addition, more than 120 Labour parliamentarians recently voted against the government over war with Iraq, and more are expected to sign up to the revolt if there is no support from the U.N. On the economic front, official data showed unadjusted producer output prices rose 0.3 pct in February and 1.6 pct on the year, the highest rate since January 2001.

U.K. factory production also increased to 0.3 pct in January from the previous month. The surprise rise in UK January manufacturing data pushed the pound higher to $1.6058 levels. Sterling also got a boost by comments from U.S. Defence Secretary Donald Rumsfeld, who raised possibility of Washington to go to war even without British support, which many of Blair's Labour party colleagues are reluctant to grant.

On the last trading day, the U.K. unit tumbled to $1.5823 after the news of surrender talks between U.S. and Iraqi officials. Next week, focus will be on economic releases including inflation data, jobs data and minutes of the Bank of England's latest rate-setting meeting.

Range for the week: $ 1.5700 - $ 1.6200.