* Yen shows little reaction to slip in Japan CPI
* Market awaits incentives after holiday lull
By Shinichi Saoshiro
TOKYO, Dec 27 The dollar inched up against the
yen on Tuesday while the euro held to modest gains against the
greenback, as the market looked to emerge out of the holiday
lull and into the last trading stretch of the year.
The euro was flat at $1.0453 after adding 0.2 percent
The dollar was up 0.1 percent at 117.230 yen after
spending the previous day stuck in a narrow 117.005-117.390
range as many major financial markets were closed for the
The yen showed little reaction to Japan's inflation data,
which saw core consumer prices mark the ninth straight month of
annual declines in November.
The U.S. currency had climbed to a 10-month high of 118.660
yen mid-month on the back of the Trump rally, during which it
benefited from expectations of higher interest rates to match
the incoming president's stimulatory economic policies.
But gravity has caught up with the dollar, which surged more
than 10 percent against the yen since Trump's U.S. election win
Some in the market now expect a deeper downward correction
to grip the greenback, with the rise in U.S. debt yields slowing
and concerns over Trump's protectionist statements taking some
shine off the dollar.
"Trump's policies are understood to be conducive to
inflation and a stronger currency. But a higher dollar would be
a significant setback to the U.S. economy seemingly in the
ending stages of an expansion," wrote Makoto Noji, senior
strategist at SMBC Nikko Securities.
"Therefore, the Trump administration and the Federal Reserve
would have to stick to a cautious monetary policy stance to
prevent the dollar from appreciating excessively. We thus expect
a very gradual downtrend for dollar/yen."
The dollar index was little changed at 102.970,
having pulled back over the last few days from a 14-year high of
103.650 marked a week ago.
The Australian dollar was down 0.2 percent at $0.7181
, inching back towards a seven-month low of $0.7160
plumbed late last week on concerns over China's economic growth.
The New Zealand dollar was also down 0.2 percent, at $0.6882
, paring the gains made the previous day.
(Reporting by Shinichi Saoshiro; Editing by Eric Meijer)