FOREX-Yen dips on jitters about possible Japan action

* Japan PM to brief media Friday on yen steps-Kyodo

* Yen dips on wariness about whether Japan will take action

* Traders await Bernanke’s speech, U.S. GDP data

By Jessica Mortimer

LONDON, Aug 27 (BestGrowthStock) – The yen dipped against the dollar
and the euro on Friday on jitters over whether Japanese
authorities could be preparing to take action to stem the yen’s
rise.

The dollar held within tight ranges against major currencies
on caution before a speech by Federal Reserve chairman Ben
Bernanke at the annual Federal Reserve conference in Jackson
Hole and U.S. gross domestic product data.

Kyodo news agency reported Japan’s Prime Minister Naoto Kan
would speak on Friday on steps to cope with a recent surge in
the yen, while Finance Minister Yoshihiko Noda reiterated the
government would take appropriate action when needed.
[ID:nTKZ006503] [ID:nTKX006956]

This put a lid on yen gains as investors paused before the
weekend, traders and analysts said.

“We have had such a strong move followed by more and more
talk about possible intervention risk that it is natural people
would want to trim long positions,” said Anders Soderberg,
currency strategist at SEB in Stockholm.

At 0802 GMT, the dollar was up 0.2 percent against the yen
(JPY=: ) at 84.67, pulling off an intraday low of 84.27 yen as
traders said the media report of Kan’s news conference sparked
short-squeezing in dollar/yen.

But the pair stayed close to a 15-year low of 83.58 yen hit
on trading platform EBS earlier this week. The euro (EURJPY=R: )
rose 0.3 percent to 107.76 yen.

The euro inched up 0.1 percent against the dollar to $1.2729
(EUR=: ), off a six-week low of $1.2588 hit earlier this week, on
renewed concerns about the fiscal health of some peripheral euro
zone countries.

Traders said the euro held within a tight range ahead of
U.S. GDP data at 1230 GMT and Bernanke’s speech at 1400 GMT.
They cited bids around $1.2690, capped by offers around $1.2750.

The Fed announced plans earlier this month to boost a
flagging economy by reinvesting money from maturing mortgage
bonds in government debt and investors will look for clues on
possible further moves.

“Jackson Hole has not traditionally been a venue for major
policy statements, but we do not exclude this possibility,”
analysts at JPMorgan said in a research note.

SEB’s Soderberg said the market was priced for a downward
revision to U.S. GDP after recent weak data. A particularly weak
number may cause knee-jerk dollar falls but this would probably
be short-lived if global equities fell in response, prompting
investors to seek the safety of the greenback, he said.

RECORD PEAK

Despite the risk of possible action by Japanese authorities
to curb yen strength such as yen-selling intervention or
monetary easing by the Bank of Japan, some traders and investors
say the yen could test a record high of 79.75 yen to the dollar,
hit in April 1995, later this year.

The fate of the yen will depend on the overall trend of the
U.S. economy rather than the possibility of Bank of Japan
intervention, Michiharu Maeda, general manager of Dai-ichi’s
separate account management division told Reuters in an
interview on Thursday.

“We believe that there is a big chance of the BOJ
intervening by itself … but the impact could be limited as the
central bank’s efforts could result in creating more chances for
the market to sell (the dollar against the yen),” Maeda said.

A euro zone source familiar with the situation said on
Thursday that joint central bank intervention to stem the rise
of the yen was not likely. [ID:nLDE67P16B]
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ PDF on Japan's yen puzzle: http://r.reuters.com/nef47n Q+A-Will Japan intervene to curb yen's rise? [ID:nTOE67O07Q] BOJ FOCUS on chance of monetary easing [ID:nTOE67N07Z] Why the yen may remain strong [ID:nTOE67B078] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

(Additional reporting by Masayuki Kitano in Tokyo)

FOREX-Yen dips on jitters about possible Japan action