TOKYO , Dec. 27 -- ( Kyodo ) _ The U.S. dollar briefly touched 105 yen before retreating to the upper 104 yen zone in Friday morning trading in Tokyo on speculation that the U.S. and Japanese central banks' policies will further diverge. At noon, the dollar fetched 104.81-83 yen compared with 104.77-87 yen in New York and 104.76-78 yen in Tokyo at 5 p.m. Thursday . The euro was quoted at $1.3723-3725 and 143.82-83 yen against $1.3686-3696 and 143.42-52 yen in New York and $1.3685-3689 and 143.38-42 yen in Tokyo late Thursday afternoon. The dollar rose in early trades, but by noon had returned to its levels in New York overnight, where it had held firm on healthy risk appetite amid stock price rises. Dollar buying for yen was also prompted by speculation of wider interest rate gaps between the United States and Japan , dealers said. U.S. Treasury bond yields are expected to continue to rise, with the Federal Reserve looking to scale down its bond-buying stimulus program, while market participants speculate the Bank of Japan will retain easing policy for some time. The 105 yen mark is a tough hurdle for the dollar to overcome, requiring firm signs of divergent Fed and BOJ policy, said Masayuki Hoshina , chief economist at Okasan Securities Co. "Not only is there some options-related dollar-selling pressure at 105 yen , but 105 is a huge psychological barrier compared to 104," Hoshina said. "Nevertheless, with the Fed set to begin tapering, I have a feeling the dollar will clear 105 yen on Monday, just in time for the end of the year," he said. The euro rose slightly against both the dollar and yen in morning trading after flattening overnight. "It's too early to attribute this morning's strengthening of the euro to a specific factor, but eurozone economies seem to be gradually improving, with no need for easing policies for the time being," Hoshina said. Friday morning's releases of Japan's November consumer price index and industrial output data were largely in line with expectations and did not significantly affect currency markets, he added.
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