Reuters: US Dollar Report: FOREX-Yen momentum seen fading, Europe in focus

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FOREX-Yen momentum seen fading, Europe in focus Mar 29th 2012, 23:35 Thu Mar 29, 2012 7:35pm EDT * Yen off peaks vs AUD, CAD, euro * EU ministers to meet to increase rescue fund * China official PMI due on Sunday By Cecile Lefort SYDNEY, March 30 (Reuters) - The yen eased from multi-week peaks against many currencies in Asia on Friday with investors opting to book profits as demand linked to the end of Japan's financial year was fading. This week was dominated by yen repatriation and position squaring which breached a range of key stop-loss levels. The U.S. dollar bought 82.33 yen, having fallen to a three-week low of 81.90 on Thursday, while the euro stood at 109.54, off a trough of 108.73, its lowest in one week. The yen also retreated against commodity-linked currencies with the Aussie at 85.36 yen, recovering some ground after skidding to a six-week low of 84.55. Likewise against the Canadian dollar, with the yen pulling away from three-week highs. It was last at 82.56. With the easing of yen repatriation ahead of the March 31 deadline, investors can switch back to using the low-yielding unit as a funding currency for carry trades, dealers said. "European stocks were down heavily overnight but as soon as U.S. markets started to recover, we saw switching out of the yen into other currencies, particularly commodity currencies," said David Scutt, a trader at Arab Bank Australia in Sydney. The yen has been the funding currency of choice for carry trades since the Bank of Japan eased policy in February. The euro seemed stuck at around $1.3301, a level it has been familiar with for the past four sessions. It touched a nearly four-week high earlier this week on comments from U.S. Federal Reserve Chairman Ben Bernanke, who indicated supportive monetary policy will remain in place. Resistance is found at $1.3350, the overnight high, and support at $1.3250. Upcoming events include Spain's budget presentation, which will show how far the government will tighten its belt. A meeting of euro-zone finance ministers will also be in focus as policymakers are expected to increase the combined lending ceiling of their two bailout funds. [ID: nL6E8ET0OX] The dollar index was a relative island of calm at 79.123, where it has been stuck since Tuesday. Beijing will release on Sunday its official PMI reading for March. With markets still fretting about China hard-landing concerns, the data will be closely watched to gauge the extent of the nation's slowdown. Expectations are for 50.8, slightly under February's 51. Japan's PMI for March was surprisingly strong at a 7-month high of 51.1, while household spending was also upbeat. Link this Share this Digg this Email Reprints

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