TOKYO- The yen picked up strength in Asia on Friday as dealers sought out safer bets after poor German data and an IMF warning of possible eurozone recession exacerbated concerns about the global economy.
The dollar, which touched a six-year high above 110 yen last week, slipped to 107.80 yen from 107.84 yen in New York.
The euro fetched 136.84 yen against 136.87 yen in US trade and well down from the 137.70 yen earlier Thursday in Tokyo.
The single currency was up slightly at $1.2694 against $1.2691.
Data on Thursday showed German exports slumped 5.8 percent, while four leading think tanks slashed their growth forecasts for the eurozone’s largest economy.
Also, International Monetary Fund chief Christine Lagarde said there was a growing chance of the eurozone slipping back into recession if action is not taken to prevent it.
Fears about the downbeat forecasts and IMF warning sparked a rally in the yen, which is considered a safe bet in times of turmoil.
“We are now in a crucial level,” says Osao Iizuka, head of trading at Sumitomo Mitsui Trust Bank.
“If the dollar-yen rate doesn’t break below well-established downside support of 107.50, it would be good to conclude the (dollar-yen) adjustment is over.”
In recent weeks the dollar has hit multi-year highs against the yen and euro as strong US data fanned expectations of a rate hike sooner than later.
However, it eased at the start of the week and on Wednesday it tumbled further after minutes from the Federal Reserve’s September meeting indicated policymakers could hold off hiking rates before its mid-2015 timetable.
But Taisuke Tanaka at Deutsche Bank in Tokyo said the dollar may win support from buying by Japanese pension funds and other institutional investors, as well as importers who missed out on its recent rally.
The more the dollar-yen falls from 108 toward the 105-level, the more their spree of dip-buying will intensify,” he told Dow Jones Newswires.