FOREX-Dollar gains vs yen after Japan reminders

* Dollar gains vs yen, traders cite Japan investor buying

* Japan finmin says to take decisive FX steps if needed

* Dollar steadies, euro stays below $1.40

* Swedish crown falls after central bank hikes rates

(Updates prices; changes byline, dateline; previous TOKYO)

By Jessica Mortimer

LONDON, Oct 26 (BestGrowthStock) – The dollar gained against the
yen, holding above its 1995 record low on Tuesday following
reminders from Japanese officials about the possibility of more
steps to curb yen strength.

The U.S. currency steadied against other currencies, with
the euro stuck below $1.40 as market participants pondered how
much monetary easing the Federal Reserve would opt for and how
much may be priced in to an already weak U.S. currency.

Helping steady the dollar were comments by New York Fed
President William Dudley overnight, who said the economic
context would determine whether an incremental or big bang
approach to asset purchases was better. [ID:nN25186345]

The market was also wary about pushing the dollar lower
versus the yen due to worries about possible intervention after
Japanese Finance Minister Yoshihiko Noda said Japan would take
decisive steps on forex when needed. [ID:nTKF107056]

At 0746 GMT, the dollar was up 0.5 percent at 81.15 yen
(JPY=: ), with traders citing talk of Japanese investors buying to
take it above reported stop losses at 80.90 and 81.05 yen.

The dollar’s record low of 79.75 yen has become a focal
point. It hit a 15-year trough at 80.41 yen on Monday, with
players wary Japan may intervene if it nears 80.00.

“There has been some verbal intervention to stem the advance
of the yen, but it’s a case of when not if we get a squeeze back
down towards the 80 (yen) area,” said Jeremy Stretch, currency
strategist at CIBC.

“The dollar is in a bit of a holding pattern. The market is
still mulling over the U.S. QE (quantitative easing) story and
dollar selling is a bit less of a one-way bet than it was.”

The Bank of Japan, which acts on behalf of the Ministry of
Finance, intervened on Sep. 15 for the first time since 2004 to
sell the yen. The greenback has fallen broadly since then as the
market has priced in more Federal Reserve quantitative easing.

“Everyone thinks intervention is a possibility, that it is
an option, but it is hard to say at what level that could
occur,” said a trader for a foreign bank in Tokyo.


The euro dipped 0.1 percent to $1.3945 (EUR=: ) after failing
to close above $1.4000 on Monday and keeping intact a familiar
range roughly between $1.3700 and $1.4160 this month.

The euro has support at around 1.3860, its low last Friday
and its 21-day moving average at $1.3866.

The dollar was up 0.2 percent against a basket of currencies
(.DXY: ) (=USD: ) at 77.287. The index has support at 76.00-10 area,
just below its Oct. 15 low of 76.144 while resistance is seen at

Elsewhere, the Swedish crown eased to 9.2530 crowns per euro
(EURSEK=: ) from around 9.17 after Sweden’s central bank raised
rates by 25 basis points as expected, but scaled down its
expectations for future policy tightening. [ID:nSAT008861]

Macro funds had trimmed some of their short dollar positions
as they waited to see how the G20 currency debate shaped up,
with a question mark after the weekend statement as to whether
major currencies such as the euro should adjust upwards as much
against the dollar as Asian currencies.


For a PDF on the G20’s uneasy truce on currencies

and trade imbalances:

For an FX column on the Fed: [ID:nLDE69L1EY]


Tensions among G20 partners have muddied the waters for
Japan, which is worried yen strength is harming its fragile
economy but pledged with its G20 counterparts at the weekend to
refrain from competitive currency devaluations. [ID:nTOE69M01E]

(Additional reporting by Charlotte Cooper and Masayuki
Kitano in Tokyo; Editing by Ruth Pitchford)

FOREX-Dollar gains vs yen after Japan reminders