FOREX-Yen retreats after rise on yuan talk

* Yen slips, Japan finmin says more steps needed on deflation

* Japan PM and BOJ gov to meet around 0300 GMT

* Euro initially climbs as stops above $1.3375 triggered

* But euro struggles as Greek worries fester

By Satomi Noguchi

TOKYO, April 9 (BestGrowthStock) – The yen retreated against the
dollar and other major currencies on Friday, cutting gains made
the previous day on talk that China is likely to allow a modest
appreciation in the yuan.

The euro rose earlier as investors trimmed record-high short
positions, but the single currency struggled to keep those gains
as worries about debt-laden Greece simmered in the background.

Traders said short-term players sold the yen back to trim
positions after pushing it broadly higher as talk on a near-term
yuan revaluation intensified to the point that some speculated
the move could come before a trip to Washington early next week
by China’s president.

The yen was also pressured after news that Japanese Prime
Minister Yukio Hotoyama and Bank of Japan Governor Masaaki
Shirakawa will meet on Friday, helping market views that the
government will voice the need for the central bank to take
further steps to fight deflation.

The meeting will be the first of regular talks between the
government and the BOJ, and comes just two days after the BOJ
board decided to hold off on new policy initiatives and gave a
slightly more positive view than before on the economy.
[ID:nTOE63709B]

“An announcement on monetary policy out of this meeting is
unlikely, but the event is probably for the government to make an
additional request to the BOJ for more easing steps, providing a
yen-selling factor,” said a senior trader for a Japanese bank.

The meeting will take place around 0300 GMT, Japan’s Chief
Cabinet Secretary Hirofumi Hirano told reporters.

Japanese Finance Minister Naoto Kan said the meetings were
likely once every three months and that he wanted more effort to
end deflation. He added that the yen has been weakening which was
good for Japanese companies. [ID:nTFD006363]

The dollar rose 0.1 percent from late New York trade to 93.53
yen (JPY=: ), recovering from Thursday’s low of 92.83 yen on
trading platform EBS. It was helped by demand from Japanese
companies and gains in other currencies versus the yen, traders
said.

The greenback had pulled back from a seven-month high of
94.78 yen hit on Monday.

Asian currencies are seen likely to gain from any move by
China to revalue its currency and the yen is perceived as a major
proxy for those regional units.

The euro (EUR=: ) was steady at $1.3359 (EUR=: ). It earlier
extended its recovery from Thursday’s low of $1.3282 hit as
concerns about Greece defaulting on its debt intensified.

Traders said stops above $1.3375 were triggered in early
Asian trade with sell orders lined up between $1.3410/30 levels.

Against the yen, the euro (EURJPY=R: ) recovered above 125 yen
briefly before standing at 124.90 yen, up 0.1 percent on the day
and above the previous day’s low of 123.43 yen.

The euro started to recover ground after European Central
Bank chief Jean-Claude Trichet assured markets that a Greece
default is unlikely, prompting some sovereign names to pick up
the battered euro in the New York session.

For more on Trichet’s remarks see [ID:nLDE6361AJ].

Greek Economy Minister Louka Katseli also told state
television that there was no chance his country will default.
[ID:nWLB2057].

“Greece remains a focus in FX markets,” JP Morgan said in a
morning report. “The next test is Greece’s launch of its next
bond issue. So far, no date has been given, but they will require
10 billion euros to meet May refunding.”

The dollar index (Read more about the global trade. ) (.DXY: ) (=USD: ) was steady at 81.519.

Speculation about a firmer Chinese yuan has reached fever
pitch since The New York Times said China was close to announcing
a shift in policy involving a “small but immediate” yuan
revaluation.

On Thursday, U.S. Treasury Secretary Timothy Geithner and
Chinese Vice Premier Wang Qishan exchanged views on U.S.-China
economic relations and the global economy during a meeting in
Beijing. [ID:nN08174034].

Investment Basics

(Additional reporting by Anirban Nag; Editing by Joseph
Radford)

FOREX-Yen retreats after rise on yuan talk