FOREX-Dollar dips, hovers near 15-year low vs yen

* Risk currencies firm after positive U.S. payrolls

* Dollar looks vulnerable against yen, near 15-yr low

* Euro up, near three-week highs vs USD

(adds quote, changed byline and dateline, pvs TOKYO)

By Anirban Nag

LONDON, Sept 6 (BestGrowthStock) – The dollar dipped on Monday and
looked poised to test a 15-year low against the yen after
failing to retain gains made after U.S. jobs data, while the
euro hit a three-week high on better risk appetite.

Less-dire-than-expected U.S. payrolls data last week eased
market anxiety over chances of a global slowdown and boosted
demand for growth-linked currencies like the Australian dollar.

“We are seeing some relief from fears about a double-dip
recession in the U.S. helping risk sentiment and the euro,” said
Gareth Berry, currency strategist at UBS. “But whether this
sentiment can be sustained or not is difficult to say.”

U.S. non-farm payrolls fell 54,000, a much smaller drop than
the predicted 100,000. Private employment, considered a better
gauge of labour market health, increased 67,000. [ID:nN02227856]

Rising risk appetite has tended to help the euro and higher-
yielding currencies in recent months, as investors increasingly
see the dollar as a funding currency for investments on
expectations of a prolonged period of near zero U.S. rates.

The euro was up 0.1 percent at $1.2907 (EUR=: ), having risen
to $1.2918 earlier in the day, its highest since Aug. 12.
Resistance is seen around $1.2932, the high struck on Aug. 12.

Market participants said they believed Asian central banks,
excluding Japan, are converting dollars into euros after they
intervene to rein in gains in their own currencies against the
greenback, further boosting the euro.


The dollar fell 0.14 percent against the yen to 84.20 yen
(JPY=: ), not far from last month’s 15-year low of 83.58. It hit
85.23 after the jobs data, but quickly erased the gains.

Dollar/yen has been very highly correlated with U.S. bond
yields in recent months. The lower U.S. yields are, the cheaper
the dollar is against the yen, as lower yields tend to
discourage investment in the dollar from Japan.

Investors have also bought yen in the past few months as they
tend to favour currencies of countries with a current account
surplus when they want to avoid risk. The rise had caused
headaches for Japanese policymakers battling deflation at home
and counting on exports to jump-start the economy.

“Because the dollar has low interest rates despite the U.S.
twin deficits, its weakness tends to stand out even against the
yen,” said Tohru Sasaki, chief FX strategist at J.P. Morgan
Chase Bank, in Tokyo.

“This shows the dollar/yen is unlikely to rise whether
global markets are leaning towards risk taking or not,” he said.

Speculators trimmed their long positions on the yen last
week but still have big yen long positions, data from the U.S.
Commodity Futures Trading Commission showed on Friday. Net long
positions were cut to 49,904 from 51,069 contracts. [IMM/FX]


PDF on Japan yen dilemma:

Q+A-Will Japan intervene to curb yen rise?: [ID:nTOE67U07V]


Berry at UBS said hedge funds were selling dollar/yen while
other asset managers were emerging as bit buyers. He added hedge
funds believed U.S. data would remain soft, putting downward
pressure on U.S. yields and dollar/yen.

On Saturday, Japanese Finance Minister Yoshihiko Noda said
Tokyo would take decisive steps to stem the yen’s rise when
needed while suggesting coordinated currency intervention in the
market was a difficult option. [ID:nTOE68300K].

Many dealers suspect Japanese exporters still have dollars
to offload ahead of their half-year finish in September. Their
offers are expected to be lined up above 85.00 and onwards.

The New Zealand dollar erased slim losses earlier to stand
at $0.7241, up 0.4 percent, after a powerful earthquake struck
the country’s second city, Christchurch, on Saturday.

(Additional reporting by Tokyo forex team)

FOREX-Dollar dips, hovers near 15-year low vs yen