Reuters: US Dollar Report: FOREX-Yen hits 3-week high vs dollar, euro edges up

Reuters: US Dollar Report Reuters.com is your source for breaking news, business, financial and investing news, including personal finance and stocks. Reuters is the leading global provider of news, financial information and technology solutions to the world's media, financial institutions, businesses and individuals. // via fulltextrssfeed.com

FOREX-Yen hits 3-week high vs dollar, euro edges up Apr 3rd 2012, 09:00 Tue Apr 3, 2012 5:00am EDT * Yen hits 3-week high vs dollar, corrects recent sharp falls * But trend for yen weakness seen intact * Euro firms, but euro zone worries leave it vulnerable * Aussie soft as RBA holds rates but shows easing bias By Jessica Mortimer LONDON, April 3 (Reuters) - The yen hit a three-week high against the dollar on Tuesday, gaining as investors reduced large short positions built in recent weeks, although the trend for a weakening Japanese currency remained intact. The euro edged higher, hovering near a one-month high versus the dollar but staying within its recent trading range, with investors still inclined to sell the currency as data showed euro zone economic weakness contrasting with improvement in the United States. The market awaited direction from U.S. Federal Reserve minutes later in the day and from Wednesday's European Central Bank policy meeting, although traders and analysts said thin volumes before the Easter holiday may keep currencies within relatively tight ranges. The dollar tumbled against the yen to a low of 81.55 yen, its weakest since March 9, as it corrected its steep February-March rally to 84.19 from 76.21 yen. It last traded flat at 82.05 yen. The fall was prompted as traders rushed to cover short positions, which according to the Commodity Futures Trading Commission hit a 4-1/2 year high in the week ending March 27. However, analysts said the broader trend for the yen to weaken remained intact following the Bank of Japan's unexpected monetary easing measures in February. "People have been buying into the idea that the yen could weaken and perhaps we have seen the strongest period for the yen," said Dag Muller, technical analyst at SEB in Stockholm. "But in the near term the yen could succumb to more of a correction from short-term exaggerated levels." Traders said stop-loss sell orders were triggered around 81.90-80, citing sales by offshore leveraged funds and Japanese investors. Analysts expect the dollar to drift higher, supported by Japan institutions which usually make large purchases of foreign government bonds after the start of the fiscal year. "Supported by these dynamics, the dollar will likely resume its slow march higher, targeting last year's high at 85.53," said Teppei Ino, a currency strategist at Bank of Tokyo-Mitsubishi UFJ in Tokyo. The euro was up 0.15 percent at 109.50 yen, having earlier hit a two-week low of 108.70 yen. It faced strong chart resistance above 111.00, which it has failed to breach for three weeks in a row. EURO HOLDS ITS GROUND The euro was up 0.15 percent against the dollar at $1.3341, staying not far from last week's one-month high of $1.3385. Since the mid- to late-March rally from $1.3000 fizzled out, it has stayed in a relatively thin $1.3250-3400 range. However, many analysts expect it to move lower once it breaks below that range, with signs the euro zone economy is faltering while worries are growing about debt levels in Spain. Trading was set to remain thin before an ECB meeting on Wednesday. Persistently high inflation is expected to prevent policymakers from doing anything new to prop up the euro zone's shaky economic recovery. Federal Reserve minutes due later in the session are also expected to suggest a stand-by approach, with the Fed likely to warn that premature tightening would be risky, while keeping an open-minded, but uncommitted view on further easing. Data on Monday showed unemployment in the euro zone reached its highest in almost 15 years in February and manufacturing contracted for an eighth straight month in March. This contrasted with a strong U.S. Institute for Supply Management index of manufacturing. "There are signs Spain is under strain, its CDS prices are still high and the banking sector is not in a happy mood, so euro/dollar should trade lower," SEB's Muller said. The Australian dollar was down 0.1 percent at US$1.0396 , cutting earlier gains, after the Reserve Bank of Australia kept interest rates unchanged at 4.25 percent but suggested a bias towards easing. Link this Share this Digg this Email Reprints

You are receiving this email because you subscribed to this feed at blogtrottr.com. If you no longer wish to receive these emails, you can unsubscribe from this feed, or manage all your subscriptions