FOREX-Yen near 15-yr high vs dlr; euro hurt by bank woes

* Dollar near 15-year lows vs yen (JPY=: ), seen vulnerable

* Euro hits low of 105.97 yen(EURJPY=: ), in sight of 9-yr low

* Aussie hits 4-month high on solid jobs data

(Updates prices)

By Tamawa Desai

LONDON, Sept 9 (BestGrowthStock) – The yen hovered near a 15-year
high against the dollar on Thursday as conflicting messages from
policymakers prompted traders to bet Japanese authorities were
not yet ready to intervene.

Japanese Finance Minister Yoshihiko Noda said on Thursday
that the ministry was conducting simulations on forex
intervention, but the yen hardly budged as the market still
thinks Japan is unlikely to intervene until the dollar falls
near 80 yen.

Noda’s comments were also somewhat undermined after Bank of
Japan Governor Masaaki Shirakawa said he did not discuss
currencies and monetary policy at a government meeting.
[ID:nTKV006408]

By 1130 GMT, the dollar had fallen 0.3 percent to 83.66 yen
(JPY=: ), within sight of the 15-year low of 83.34 yen hit on
trading platform EBS on Wednesday.

“Comments from Japanese authorities indicated they are not
in a hurry to intervene, so new lows should be tested,” said
Roberto Mialich, currency strategist at Unicredit in Milan.

Options traders said there was good demand for yen calls in
the 1- to 2-month bracket, but yen puts were more popular in
shorter dates, suggesting investors are hedging their bets about
possible intervention.

The one-week dollar/yen risk-reversal, the premium required
to hold a put or a call, traded marginally in favour of yen
puts, traders said.

The euro fell (Read more about the trembling euro. ) to 105.97 yen, nearing a nine-year low of
105.44 yen hit in late August. It was last down 0.2 percent at
106.42 yen (EURJPY=R: ).

DOWNWARD BIAS FOR EURO

The euro remained pressured as investors fretted about the
fragile euro zone banking system.

The single currency fell on comments late on Wednesday from
European Central Bank Executive Board member Juergen Stark, who
told a meeting of German lawmakers that German banks were
undercapitalised, according to a participant. [ID:nBAT005656]

“Confidence is evaporating in the euro zone banking system,
particularly for Portugal, Ireland and Greece, and supporting
the system will require government debt to rise to unsustainable
levels. That is what the market is concerned about,” said Lee
Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

The euro was down slightly against the dollar at $1.2710
(EUR=: ). Bids were seen at $1.2680 and $1.2630, traders said. A
near-term target was seen at the 100-day moving average of
$1.2664.

The euro revived a bit after ECB Governing Council member
Yves Mersch said the euro zone was on the brink of a sustainable
recovery and the ECB was likely to discuss removing some support
measures at its December meeting. [ID:nFLA9KE693]

But the bias remains to the downside, Unicredit’s Mialich
said. “The $1.2660 level may hold, but at the end of the day,
there is not much room for recovery.”

Talk of massive options with a strike price of $1.2600 set
to expire later in the day could dictate trade, one London-based
trader said.

The Australian dollar extended gains as a barrier was taken
out at $0.9250, hitting a four-month high of $0.9261 (AUD=D4: ) on
strong jobs data and raising speculation of a rate rise.

Interest rate futures were pricing in a 24 percent chance of
a rate increase, compared to just 7 percent before, and this was
seen supporting the Aussie in the near term.

FOREX-Yen near 15-yr high vs dlr; euro hurt by bank woes