FOREX-Euro falls on bank sector jitters, Aussie sags

* Euro falls from 3-week high as bank worries rekindled

* Greenback near 15-yr low vs yen, BOJ takes no action

* Aussie down after RBA statement, Labor wins power

By Rika Otsuka

TOKYO, Sept 7 (BestGrowthStock) – The euro fell (Read more about the trembling euro. ) on Tuesday from a
three-week peak against the dollar hit the previous day, as
rekindled worries about the European banking sector prompted
investors to cut risks.

The euro fell (Read more about the trembling euro. ) 0.6 percent on the day to $1.2797 (EUR=: ) after
triggering stop-loss orders in the $1.2850-60 area, as a Wall
Street Journal report stoked fears about the viability of
European banks by highlighting the weakness of euro zone stress
tests earlier in the year.

The single currency was further pressured as Germany’s
banking association said on Monday the country’s 10 biggest banks
may need 105 billion euros of additional capital under a revamp
of banking rules designed to prevent future financial crises.
[ID:nLDE6850Q9]

The euro on Monday rose as high as $1.2920, its highest in
almost three weeks. It is now testing support at $1.2795-80, with
the 21-day moving average at $1.2795 on Tuesday and the 55-day
moving average at $1.2788.

“Concerns about euro zone banks have been growing again,
hitting investor sentiment that had improved a little after
better-than-expected U.S. jobs data last week,” said Tsutomu
Soma, senior manager of the foreign securities department at
Okasan Securities.

“The trend in the euro might have changed as the market’s
mood is shifting back toward risk reduction.”

The dollar index (Read more about the global trade. ), a gauge of the U.S. currency’s performance
against a basket of six major currencies, rose 0.4 percent to
82.403 (.DXY: ), rebounding from a four-week trough of 81.876
marked on Monday.

U.S. financial markets were closed on Monday for the Labor
Day holiday and will resume trading later in the day.

The dollar slipped 0.1 percent against the yen to 84.10 yen
(JPY=: ), remaining within sight of a 15-year low of 83.58 yen hit
last month, as investors stay keen to buy safe-haven currencies,
such as the Japanese currency and the Swiss franc.

The Bank of Japan took no new policy steps at a meeting on
Tuesday.

The central bank boosted its cheap loan scheme at an
emergency meeting last week, bowing to government pressure for
steps to protect a fragile recovery after the yen surged to a
15-year high against the dollar, though the move’s impact has
been limited.

The greenback could slip further, given expectations that the
BOJ will take no additional easing steps in the near term, while
wariness over possible market intervention by Japanese
authorities to rein in the yen’s gains is keeping speculators
cautious about aggressively taking long yen positions, traders
said.

The euro slid 0.6 percent against the yen, to 107.65 yen
(EURJPY=: ), although it was still well above a nine-year low of
105.44 yen reached in late August.

The euro was down 0.8 percent versus the Swiss franc at
1.2925 francs (EURCHF=: ), crawling towards an all-time low of
1.2850 francs struck on Aug. 31.

The Australian dollar dipped 0.4 percent on the day to
$0.9130 (AUD=D4: ), having slipped from a four-week high of $0.9181
hit on Monday.

The Reserve Bank of Australia kept rates at 4.5 percent as
expected on Tuesday. While the central bank is generally upbeat
on the Australian economy, it mentioned some uncertainty about
overseas.

“For the Aussie dollar to rise beyond $0.92, the global
economy will need to gather more strength,” said Ayako Sera,
market strategist at Sumitomo Trust Bank.

The Australian currency eased further after two key
independent lawmakers backed the Labor party, giving Prime
Minister Julia Gillard the majority she needs to form a
government.

(Additional reporting by Charlotte Cooper and Hideyuki Sano;
Editing by Joseph Radford)

FOREX-Euro falls on bank sector jitters, Aussie sags