News: FOREX-Yen firms, sterling droops in early Asian trade

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    • Japanese currency firm, but so far shy of post-Brexit highs
    • Fed held rates steady to assess Brexit impact, minutes show
    • Sterling nurses losses after logging fresh 31-year low

    TOKYO, July 7 (Reuters) - The yen stood tall in early Asian trading on Thursday while sterling foundered in the fallout from Britain's vote last month to exit the European Union.

    The euro slipped 0.2 percent to 112.19 yen EURJPY=R , but managed to hold above its Wednesday low of 110.84 and a 3 1/2-year low of 109.30 logged soon after the results of the Brexit referendum were apparent.

    The dollar slipped 0.3 percent to 101.04 yen JPY= , though it also remained above the previous session's low of 100.20 as well as its June 24 nadir of 99.000 hit after the UK's vote.

    "There's a lot of nervousness. Post-Brexit issues are starting to sink in," said Jeff Kravetz, senior investment strategist at the Private Client Reserve at U.S. Bank in Scottsdale, Arizona.

    "The yen has been a big story. It keeps strengthening as a safe-haven currency," he said, adding that the dollar might break under 100 yen again against the backdrop of uncertainty.

    Sharp yen gains are usually followed by verbal warnings from Japanese financial officials, one of whom said on Wednesday that the finance ministry was closely watching the currency market to see if any speculative factors were behind market moves.

    According to Japan Macro Advisors' probability model of the risk of direct foreign exchange intervention, the dollar's fall to 95 yen could be a trigger point in the next 2 months, while from September onward, the threshold would shift to 90 yen.

    "The Japanese yen is appreciating from an extremely weak level and the yen has to appreciate much further before Japan could gain an implicit approval from other G7 countries," said Takuji Okubo, chief economist at Japan Macro Advisors.

    "Past episodes of intervention suggest a unilateral intervention without implicit approval from other G7 tends to be ineffective," Okubo said in a note.

    Beleaguered sterling fell as low as 128.81 yen GBPJPY=R on Wednesday, its lowest since November 2012. It was last down 0.3 percent at 130.47.

    The pound skidded to $1.2798 GBP=D4 in the previous session to log a fresh 31-year low, and was last down 0.2 percent at $1.2904.

    Fanning fears of financial contagion in the wake of the Brexit vote, the number of British property funds suspended in recent weeks doubled to six on Wednesday, leaving 15 billion pounds ($19.37 billion) frozen in the biggest seizing up of investment funds since the 2008 financial crisis.

    Minutes of the U.S. Federal Reserve's June policy meeting released on Wednesday showed that policymakers decided to keep interest rate hikes on hold as they assessed the Brexit impact.

    The dollar was lifted overnight when Institute for Supply Management data revealed that growth in the U.S. economy's service sector increased in June at its fastest pace in seven months.

    Investors awaited the key U.S. non-farm payrolls numbers due on Friday, which are expected to show employers added 180,000 jobs last month, according to a preliminary Reuters poll. That would follow May's surprisingly weak reading of just 38,000, which some economists expect to be revised upward.

    ($1 = 0.7743 pounds)

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