* Dollar holds above 1-week low vs yen, but struggles to
* Yen shrugs off slightly smaller-than-expected rise in
Tokyo April CPI
* Euro recovers from low hit on comments by ECB's Draghi
(Updates prices, adds comments)
By Hideyuki Sano and Masayuki Kitano
TOKYO/SINGAPORE, April 25 The dollar held steady
near a one-week low versus the yen on Friday, struggling to gain
traction as rising tension in Ukraine undermined optimism about
U.S. economic growth.
The dollar last stood at 102.35 yen, not very far
from a one-week low of 102.085 set on Thursday, when rising
tensions in Ukraine helped keep risk appetite in check.
The dollar has had a lacklustre week against the yen, with a
weekly loss of about 0.1 percent at its current levels.
"Although the price action in the currency market has been
limited so far, the escalation of tension in Ukraine is likely
to keep markets risk-off," said Kyosuke Suzuki, director of
forex at Societe Generale.
Ukrainian forces killed up to five pro-Moscow rebels on
Thursday as they closed in on the separatists' military
stronghold in the east, and Russia launched army drills near the
border in response, raising fears its troops would invade.
The yen showed limited reaction to Japan's consumer price
data, which showed core CPI rose 2.7 percent in the Tokyo area,
slightly less than economists' forecast of 2.8 percent.
As the impact of a consumption tax hike is estimated to have
boosted the reading by 1.7 percentage points, the data suggested
inflation has been essentially flat from March, when it rose 1.0
"It's a very muted day. The (CPI) data was a tiny miss
and had no real effect," said Jeffrey Halley, FX trader for Saxo
Capital Markets in Singapore.
Halley said there were some dollar bids against the yen down
towards the 102.00 yen level, adding that the dollar's top side
might be capped near 102.60 yen during Friday's Asian session.
Many investors expect Japan's inflation to ease later this
year, prompting more policy easing from the Bank of Japan. But
BOJ Governor Haruhiko Kuroda has been bullish, saying inflation
is firmly on a path to reach the BOJ's target of 2.0 percent.
As Kuroda's rosy economic view has weakened expectations of
an immediate easing by the BOJ, thus helping to support the yen,
many investors are looking to the BOJ's economic outlook report
due on Wednesday.
Concerns over a wider conflict between the West and Russia
overshadowed an otherwise brightening economic picture in the
March U.S. durable goods orders rose 2.6 percent, above
economists' forecast for a 2 percent gain.
The euro held steady at $1.3833, having recovered
from Thursday's low of $1.3791 hit after European Central Bank
President Mario Draghi reiterated the potential for asset
purchases to ward off deflation risks.
He warned that a rising euro, which hurt the euro zone's
exporters, could force the ECB's hand on monetary policy
"The exchange rate is an increasingly important factor in
our assessment of the outlook for price stability," Draghi said.
The euro was also supported by an upbeat German business
sentiment index despite recent tensions over Ukraine.
(Editing by Kim Coghill)