Any relief over the US earnings reports would tend to keep the yen on the defensive against major currencies.

The US currency retreated to 100.80 in European trading on Wednesday before rallying to 101.70 as the Morgan Stanley and Coca Cola results were better than expected. The yen was also subjected to significant selling pressure against the Euro.

Results from the US banks will remain under closely scrutiny over the remainder of this week and the yen will tend to weaken if there are above-consensus results, especially if there are further heavy debt write-downs.

Nevertheless, overall risk tolerances remained higher on Thursday and this maintained a weaker tone for the Japanese currency with the dollar challenging the 102.0 level against the yen.

Domestically, the monthly Tankan index weakened to a 5-year low for April which will maintain a lack of confidence in the economy. There are, however, reduced expectations that the Bank of Japan will cut interest rates in the near term and this may provide some degree of support to the Japanese currency. International risk factors will tend to dominate in the short term.