Reuters: US Dollar Report: FOREX-Euro sags, yen gains as market trims risky FX positions

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-Euro sags, yen gains as market trims risky FX positions Aug 28th 2012, 04:28 Tue Aug 28, 2012 12:28am EDT * Euro's recovery may be at risk ahead of key events * Dollar/yen, cross/yen down on Japanese flows * Aussie hits 1-month low on concerns about end of mining boom * Kiwi falls, NZ's biggest firm cuts f'cast payout on kiwi impact By Hideyuki Sano TOKYO, Aug 28 (Reuters) - The euro sagged against the dollar while the yen gained broadly as market players trimmed their long positions in risk currencies ahead of a central bankers' meeting later in the week. The Australian dollar hit a one-month low against the dollar and the yen as it also smarted from worries about the extent of the slowdown in China, and its impact on the mining boom in Australia. Analysts say the euro's recovery since late last month on hopes of European Central bank actions might be losing momentum as the currency slipped further from its seven-week peak hit last week. "The euro had been bought on hopes after the ECB comments. But unless the market sees action to back up its words soon, the rally will fizzle," said Minori Uchida, chief FX strategist at the Bank of Tokyo-Mitsubishi UFJ. The euro fell 0.2 percent against the dollar to $1.2474 , down more than a full cent from its seven-week high of $1.2590 hit last Thursday. The euro had also been supported since last week after minutes of the U.S. Federal Reserve's last policy meeting sparked expectations that the Fed may start a fresh round of stimulus next month. But many traders are now looking for more solid signs of that happening, awaiting Friday's speech by U.S. Federal Reserve Chairman Ben Bernanke at an annual informal meeting of central bankers at the U.S. retreat of Jackson Hole. On the other hand, the ECB is expected to reveal further details of a new programme to lower the debt yields of Spain and Italy after its Sept. 6 policy meeting, though its implementation is likely to start in late September at the earliest. While hopes that the ECB would step in to buy short-term Spanish bonds if Spain requests a bailout have bolstered the euro in the past several weeks, it remains to be seen if this would be enough to win back investor confidence in southern European sovereign debt. "It seems like it will take some time before the ECB starts buying bonds so there's a chance markets will get disappointed," said a trader at a Japanese bank. Against the yen, the euro fell 0.5 percent to 97.96 yen as some market players are forced to cut losses on the pair, while Japanese investors were also said to be selling the euro against the yen. "I have a feeling that there are still some players who are long in the euro/yen after the Fed's minutes and that the market may be forced to trigger more stop-losses on these positions even though I'm not super-bearish on the euro," said a trader at a British bank. The yen was also helped by Japanese exporters' buying against the dollar as well as loss-cut buying in other cross/yen pairs. The U.S. dollar fell 0.3 percent to 78.52 yen. AUSSIE, KIWI HEAD SOUTH The Australian dollar hit a fresh five-week low of $1.0345 , pressured by worries over the slowdown in China's economy as Shanghai shares hit fresh 3 1/2-year lows on Monday. Sharp drop in the price of iron ore, coal and other commodities is adding to worries, although Australian Treasurer Wayne Swan hosed down concerns the declines will weaken government revenues. "Given that the Aussie's fair value based on purchasing power parity is around $0.70, a level above $1.05 would be difficult to maintain," said Tokyo-Mitsubishi's Uchida. "On the other hand, the Australian central bank is not as inclined to ease as the Fed and the ECB. There's buying in the Aussie by central banks which want to increase the Aussie in their foreign reserves. So I do not expect it to fall below parity against the dollar," he added. The Aussie also hit a one-month low of 81.22 yen, and a seven-week low of A$1.2068 per euro. Some traders said the Aussie's slide was triggered by an abrupt fall in the New Zealand dollar, which fell 0.2 percent after the dairy processor Fonterra Co-operative Group -- the country's largest company -- cut its forecast payout to farmers because of a high kiwi. 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