Reuters: US Dollar Report: FOREX-Yen hits 2-week low ahead of BOJ, euro stuck in range

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FOREX-Yen hits 2-week low ahead of BOJ, euro stuck in range Oct 4th 2012, 05:58 Thu Oct 4, 2012 1:58am EDT * Yen undermined by speculation of more BOJ easing * Dollar supported after upbeat U.S. job, service-sector data * Euro stuck in range as market looks to when Spain asks for help * ECB seen on hold this time, eyes on Spanish bond auction * Aussie hits 1-month low after retail sales data By Hideyuki Sano TOKYO, Oct 4 (Reuters) - The yen slid to a two-week lows against the dollar on Thursday after upbeat U.S. data and as speculators grew wary in case the Bank of Japan surprises this week by easing policy. The euro held firm against the dollar as investors expected the European Central Bank to keep rates on hold, though uncertainty over Spain kept the currency hemmed in a familiar range. The dollar rose as high as 78.72 yen, a level last seen on Sept. 19, when the BOJ unveiled an increase in its asset purchase programme. It last stood at 78.57 yen, up 0.1 percent from late U.S. levels. The euro also rose to two-week high of 101.78 yen before easing to 101.61 yen, still a gain of 0.4 percent and tackling its 200-day moving average at 101.74 yen. The BOJ, which only last month boosted its asset-buying programme, has been under intense political pressure to offer more stimulus to spur growth and weaken the yen. Analysts generally expect the BOJ to stand pat at the Oct. 4-5 meeting to gauge the effects of its latest easing, but pressure is expected to stay on ahead of its next policy meeting on Oct 30 when it will also have an economic review. Economy Minister Seiji Maehara said on Wednesday he would like to talk to the BOJ to push the central bank to achieve its de facto inflation target, noting he is entitled to attend the BOJ's policy meeting if he wants to. A source told Reuters that Maehara indeed plans to attend the meeting this week, where as a government representative he can comment on policy though he cannot vote on it. "It may take a while before the BOJ will actually do something. Still, market players are speculating about more easing and you have to consider which side of position you should take under such conditions," said Katsunori Kitakura, associate general manager of market making at Sumitomo Mitsui Trust Bank. The U.S. currency was also helped by fairly upbeat U.S. economic data on Wednesday, including larger-than-expected increase in private-sector jobs and improvement in the service sector. The dollar's index against a basket of currencies held at 79.82, flat on the day but not far from three-week high of 80.147 hit on Monday. The next major focus of the market for the dollar will be Friday's U.S. payroll data. But investors will also look to the minutes of the Fed's last policy meeting, where it decided on new mortgage bond buying scheme, for any hint of the Fed's next moves, as its Operation Twist is due to expire by the year-end. REAL MOVER IN MADRID Against the greenback, the euro ticked up 0.2 percent to $1.2929, though it remained stuck in a $1.2800/3000 range as investors look to when Spain will seek a bailout and trigger the ECB's recently announced bond-buying programme. Gain in the euro and other risk currencies coincided with rise in U.S. stock futures, which some traders said was sparked after Republican presidential candidate Mitt Romney he went beyond expectations in policy debate. A victory by Romney is perceived to be positive for stocks because the Republicans are seen more friendly to Wall Street. With the Republican's grip of U.S. House of Representatives seen intact after the election, deadlock over U.S "fiscal cliff" is likely to persist if President Barack Obama is re-elected. Looking ahead, The European Central Bank is expected to hold interest rates when it meets on Thursday to allow time for new details on the health of the euro zone economy and for Spain to ask for aid. "With very little expected for this ECB meeting, the real market mover for the euro may be the Spanish bond auctions," said Mary Nicola, a strategist at BNP Paribas. "Today's Spanish bond auctions will provide a litmus test for the market's perception on Spain." Madrid is looking to raise up to 4 billion euros ($5.2 billion) by selling three bonds maturing 2014, 2015 and 2017. The euro hit a fresh 3 1/2-month high against the Australian dollar, which also slipped near last month's trough against the U.S. dollar. The Aussie last stood at $1.0230, up 0.1 percent but it dropped earlier to a fresh one-month low of $1.0182 after data showed Australian retail sales edged up only marginally in August, although it was not far from market expectations. Mounting signs of slowdown in China, Australia's main trade partner, prompted Australia's central bank to cut interest rates this week and leave the door ajar for more. Link this Share this Digg this Email Reprints

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