TOKYO ? The dollar fell from earlier gains against the yen in Asia Thursday on profit taking, after strong US manufacturing data briefly lifted the greenback and encouraged risk appetite, dealers said.
The dollar changed hands at 84.51 yen in Tokyo morning trade before falling back to 84.29, below its 84.42 yen level in New York late Wednesday.
The euro held firm at $1.2798, compared with $1.2807 in New York, as stock market gains overnight in the US fuelled risk appetite.
The single currency was flat at 108.14 yen.
Against the Japanese currency, the dollar neared its lowest level in 15 years at 83.60 yen in New York but rebounded on data showing an improvement in the US manufacturing sector.
The Institute of Supply Management (ISM) said Wednesday that its manufacturing index rose to 56.3 points from 55.5 percent in July. A reading above 50 percent indicates an expanding manufacturing sector.
"The strong ISM data gave a boost" to the dollar, said Credit Agricole dealer Yuji Saito.
However, Yuichiro Harada, senior dealer at Mizuho Corporate Bank told Dow Jones Newswires that Japanese exporters were likely to treat any rises in the dollar as an opportunity to sell, keeping the greenback from sharper gains.
Saito added "chances are now higher" that Japanese authorities will step into markets to sell the yen.
The high yen "has become a political tool" with Prime Minister Naoto Kan facing a challenge from veteran powerbroker Ichiro Ozawa in the September 14 vote to pick the ruling-party leader, Saito said.
Kan needs to show he is serious about taking measures to curb the yen's strength for the nation's exports, he said.
Ozawa, who will become prime minister if he wins the ruling party race, has said Japan should take "bold steps, including market intervention."
The dollar's upside was limited ahead of Friday's release of closely watched jobs data from the US government.
Payrolls firm ADP said US private sector employment unexpectedly dropped in August for the first time in seven months, signalling a weakening economic recovery.
The government's monthly employment data from the government are due on Friday.
