FOREX-Dollar woes return after G20; yen at 15-year peak

* G20 vows to refrain from competitive devaluations

* Market awaits further clues on possible Fed easing

* Yen at 15-yr high; euro gains seen capped by options

(Updates prices, adds detail, comment)

NEW YORK, Oct 25 (BestGrowthStock) – The dollar fell broadly to a
fresh 15-year low against the yen on Monday after a Group of 20
agreement failed to give investors any reason to stop selling
the U.S. currency.

At the meeting in South Korea, G20 finance chiefs on
Saturday agreed to shun competitive currency devaluations but
stopped short of setting targets to reduce trade imbalances
clouding global growth prospects. [ID:nTOE69M004]

Analysts said the outcome pointed to a status quo in
currency markets, with the dollar staying under pressure due to
expectations the Federal Reserve will unveil a second round of
quantitative easing as early as its Nov. 2-3 meeting.

The G20 statement “didn’t go far enough as saying countries
won’t devalue their currencies so we saw the yen go to a fresh
15-year high,” said John Doyle, strategist at Tempus Consulting
in Washington. “The focus now is on the Fed’s November 3
meeting and expectations of further quantitative easing.”
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ G20 PDF file at For an FX column on the Fed, click on [ID:nLDE69L1EY] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The dollar index (Read more about the global trade. ), which measures its value against a basket
of currencies, dropped 0.5 percent to 77.126 (.DXY: ), but
support was seen around its 10-month low at 76.144 touched mid

The dollar fell 80.41 yen on electronic trading platform
EBS (JPY=EBS: ), its lowest in 15 years. Market players said
chances of Japanese yen-selling intervention would increase if
the dollar fell below 80.00 yen and tests its record low of
79.75 yen.

In early New York trade the dollar was last at 80.62 yen

The euro rose 0.2 percent to $1.3975 (EUR=: ), having earlier
risen as high as $1.4080 and breaking through resistance at

But the euro pared gains after a report showed sales of
previously owned U.S. homes rose a more than expected 10
percent in September indicating the housing market was
stabilizing at weaker levels. [ID:nN25264142]

“The data’s much better than we had expected but it will
have zero impact on the course of U.S. monetary policy, which
is on railroad tracks right now and heading in one direction,
with nothing that could possibly derail it,” said Michael
Woolfolk, senior currency strategist at BNY Mellon in New York.
“Bernanke’s mind is fixed on quantitative easing and that’s
what we’ll get next week.”

The move back below $1.4000 was viewed as significant given
the euro had failed several times in recent days to break
through and hold that level.

The euro rally on Monday marked the 76.4 percent
retracement of the euro’s drop to $1.3697 last week from an
8-1/2 month high of $1.4161 hit earlier this month.

Some traders expect $1.4161 to be reached soon. But gains
above there were likely to be checked due to the presence of
some large option barriers, including a one-touch option
barrier at $1.4215 that is set to expire on Wednesday.

That could lead to a stronger-than-usual defence of that
level with the barrier payout said to be a 30 million euros.
More typical option payouts are in the 3-5 million euro range.

One trader said real money accounts and trend-following
commodity trading advisers were seen buying the euro and the
Australian dollar, while another cited buying of the euro and
the Australian dollar by Asian accounts.

The Australian dollar surged roughly 1.2 percent to $0.9940
(AUD=D4: ), boosted by news that Singapore Exchange (SGXL.SI: )
will buy Australian bourse operator ASX (ASX.AX: ), and
expectations of a rate hike early next month. [ID:nSGE69N02J].


That was in sharp contrast to the United States where the
Federal Reserve looks all set to ease monetary policy further.

While U.S. Treasury Secretary Timothy Geithner reiterated
that the United States supports a strong dollar at the G20
meeting, there were few takers for that.

“It is one thing for the Treasury to say that, but then the
Fed holds all the ammunition and when it is set to print more
money, the dollar will remain a weakened currency,” said Jane
Foley, senior currency strategist at Rabobank.

Analysts at Goldman Sachs said the Fed is almost certain to
announce renewed monetary easing at next week’s policy meeting.
They said it may announce $500 billion in asset purchases or a
bit more over a period of about six months, and the size could
eventually reach $2 trillion.

In a Reuters poll earlier this month, U.S. primary dealers
projected the size of quantitative easing in a range of $500
billion to $1.5 trillion [FED/R].
(Additional reporting by Anirban Nag in London)
(Reporting by Nick Olivari; Editing by Andrew Hay)

FOREX-Dollar woes return after G20; yen at 15-year peak