Reuters: US Dollar Report: FOREX-Dollar hovers near 3-mth high vs yen; Aussie rises

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FOREX-Dollar hovers near 3-mth high vs yen; Aussie rises Oct 24th 2012, 05:43 Wed Oct 24, 2012 1:43am EDT * Aussie dollar rises on surprisingly high Q3 inflation * Gets additional lift from HSBC China flash PMI * Dollar/yen eases but still near 3-month high By Masayuki Kitano SINGAPORE, Oct 24 (Reuters) - The dollar hovered near a three-month high versus the yen on Wednesday, supported by hopes for more Bank of Japan monetary easing, while the Australian dollar rose as traders trimmed back bets for its central bank to cut interest rates next month. The U.S. dollar eased 0.1 percent from late U.S. trade on Tuesday to 79.81 yen, but still near the previous day's high of 80.02 yen, its peak since early July. The yen has retreated over the past few weeks on growing market expectations that the Bank of Japan will unveil further monetary stimulus at its policy meeting on Oct. 30 in a bid to help the export-focused economy through a global slowdown. Although some traders have begun reducing their bullish bets on the dollar against the yen this week, others who missed out on the recent move seem to be looking for chances to buy, said a trader for a major Japanese bank in Singapore. "At the moment, bids are parked at the 79.50/60 (level) but am also seeing stops below the 79.50 level," the trader said, referring to a mixture of dollar buying orders and stop-loss offers at levels around 79.50 yen. The Australian dollar rose 0.5 percent to $1.0313, having extended its gains after a survey of Chinese manufacturers reduced worries of a hard landing for the world's second largest economy. "We may start to see a counter move toward putting risk back on, especially after the risk-off moves we saw the previous day," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. Earlier in the day, the Australian dollar had risen after data showed Australian consumer prices rose a surprisingly large 1.4 percent last quarter, prompting the market to scale back bets that Australia's central bank will lower interest rates at its next policy meeting in November. Interbank futures , which had been implying a two-in-three chance of a quarter point cut from the current 3.25 percent cash rate at the Reserve Bank of Australia's Nov. 6 policy meeting, trimmed chances to about 50 percent after the inflation data. The euro held steady at $1.2986. The euro had dipped to as low as $1.2952 on Tuesday, when Spanish bond yields rose in the wake of credit rating downgrades of five of Spain's regions by Moody's Investors Service. Expectations that Spain will apply for a bailout, prompting the European Central Bank to start buying its bonds, have helped support the euro in recent weeks, although uncertainty over the timing of such a move has helped to limit its gains. Later on Wednesday, investors will turn their focus to the U.S. Federal Reserve's policy statement due at 1815 GMT. The Fed appears intent to stick to its bond-buying stimulus, having already indicated it would take more than a modest show of economic strength for policymakers to begin taking their foot off the gas. Link this Share this Digg this Email Reprints

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