Dollar holds steady in Asia

The dollar was little changed against the yen in early Tuesday trading in Asia following its decline recently on concerns about Hurricane Katrina's impact on the U.S. economy and dwindling prospects for higher U.S. interest rates.

The dollar was trading at 109.22 yen in Tokyo late morning, unchanged from late Monday and below the 109.66 yen it bought in New York late Friday. The euro fell to US$1.2496 from US$1.2556 late Monday.

For further signs on the U.S. economy, traders were awaiting the release later Tuesday of the Institute for Supply Management's service index, which is expected to increase to 61.3 in August from a 60.5 reading the previous month. But the ISM manufacturing index posted a surprise drop last week, and the service index could be poised to follow suit. Although these economic reports don't yet take into account the hurricane, they are eroding confidence in the dollar because it appears that the American economy may have been slowing even before Katrina hit. U.S. markets were closed Monday for Labor Day, AP reports.

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