FOREX-Dollar grinds towards 1995 record low as yen gains

* Yen gains as month-end corporate flows, hedge funds help

* Dlr slips towards 80.41 yen 15-year low, 79.75 record low

* Main focus still on FOMC and likely QE next week

By Masayuki Kitano and Charlotte Cooper

TOKYO, Oct 29 (BestGrowthStock) – The dollar fell within sight of its
1995 record low on Friday as the yen rose broadly and pushed down
the euro and higher-yielders, with trade made choppy by month-end
business but still in ranges ahead of a Federal Reserve decision
on easing.

Talk of selling of dollars and euros by Japanese exporters
taking care of their month-end settlement needs, as well as
dollar selling by overseas hedge funds who had bought the pair
the day before helped push the Japanese currency nearer to
Monday’s 15-year peak of 80.41 yen per dollar and within a yen of
its record trough of 79.75 set in 1995.

But the major currencies were broadly in the ranges that have
confined them in the past few weeks as investors wait to see if
the Fed says next week that it will resume quantitative easing as
many expect, and if so, in what size and over what time horizon.

“Once the people who need to sell (the dollar) are done
selling, I don’t think we will see that much of a fall especially
with the FOMC coming up,” said a trader for a Japanese bank,
adding that Japanese exporter offers helped drag the dollar
lower.

Japanese shares also fell, with the benchmark Nikkei average
(.N225: ) down 1.6 percent, making some speculate this could temper
the dollar’s fall as the market might become cautious of Japanese
yen-selling intervention.

A falling share market is seen as one of the conditions which
could prod Japanese authorities to intervene, after they did so
in September to counter a push higher in the yen. [ID:nTOE69P01U]

Others felt intervention was unlikely unless the dollar fell
through 80.00 yen, but one trader expected option-related dollar
buying could emerge around 80.00.

“There is also wariness about intervention, so I don’t
imagine that the dollar will suddenly break below 80.00,” he
said.

The dollar fell 0.4 percent to 80.68 yen (JPY=: ) and the euro
dropped 0.7 percent to 112.06 yen (EURJPY=R: ).

The Australian dollar fell 0.5 percent to 78.78 yen
(AUDJPY=R: ) and dipped 0.1 percent to $0.9766 (AUD=D4: ). A trader
in Australia reported selling in yen crosses seemed to be coming
out of Tokyo.

IT’S STILL THE FED

The main market focus remains what the Fed decides at its
meeting on Nov.2-3, with U.S. growth data later on Friday
potentially feeding into the debate over how big Fed asset-buying
should be this time around. [ID:nFEDAHEAD] [FED/R]

Due at 1230 GMT, the GDP report is expected to show the
world’s biggest economy grew 2.0 percent in the third quarter.
While this would be too subdued to alter the expectation there
will be further Fed stimulus, some dealers are nervous in case
the data repeats a big upside surprise in UK GDP which sent
sterling flying on reduced expectations of easing there.

Others, though, said the data was unlikely to give currencies
new direction, with the mood swings of the past few sessions
stemming from uncertainty about how big U.S. QE could be.

A New York Fed survey of dealers and investors included
scenarios of up to $1 trillion, a figure larger than recent
estimates, and analysts say possible scenarios include the Fed
starting at $80 billion to $100 billion a month but leaving
itself the option to do more. [FED/R]

“We think $500 billion over six months but they may not put a
timeframe to it,” said Robert Ryan, FX strategist at BNP Paribas
in Singapore.

“At the end of the day, it may still end up being a trillion
but the announcement will be something that allows them to say as
long as it looks warranted they’ll continue to do it – so the
support and commitment is there.”

The dollar has shed about 7 percent against a basket of
major currencies in the past two months, and some analysts say
it’s due for a rally once the Fed reveals its easing plans.

Others say its performance against the euro at least will
depend to some extent on how much emerging economies recycle
dollar reserves generated by intervention into euros.

The euro slipped 0.3 percent to $1.3888 (EUR=: ). The dollar
index (.DXY: ), which tracks the greenback’s performance against
six major currencies, edged up 0.1 percent to 77.404 after
falling 1.1 percent the previous day.
(Additional reporting by Hideyuki Sano and Yoko Matsudaira in
Tokyo and Ian Chua in Sydney; Editing by Joseph Radford)

FOREX-Dollar grinds towards 1995 record low as yen gains