Reuters: US Dollar Report: FOREX-Dollar recovers vs yen, market still nervous about commodities

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FOREX-Dollar recovers vs yen, market still nervous about commodities Apr 16th 2013, 06:41 Tue Apr 16, 2013 2:41am EDT * Bargain-hunting helps dollar/yen bounce back from 2-week low * Risk sentiment still shaky after weak China data, gold rout, Boston explosions * Yen-selling loses steam after US report mentions Japan's policy * Aussie bounces back after sharp fall, gold still in focus By Hideyuki Sano TOKYO, April 16 (Reuters) - The dollar recovered from two-week lows against the yen on Tuesday on the back of bargain-hunting but traders remained wary of a further rout in gold prices that could spur demand for the safe haven Japanese currency. Commodity currencies such as the Australian dollar also found support after a tumble the previous day as gold recouped some losses after posting the biggest fall in about 30 years. The dollar rose 0.8 percent in Asian trade to 97.46 yen , though it was still down about 2.5 percent from a four-year high of 99.95 yen hit last week following the Bank of Japan's big stimulus launch. "For those who have been looking for a chance to buy the dollar, it was a blessed dip indeed," said a trader at an western bank in Tokyo. Earlier on Tuesday, the U.S. currency had fallen as low as 95.67 yen, its lowest since April 4, hit by disappointing Chinese and U.S. data. News of explosions in Boston, which a White House official said are being treated as an "act of terror", also prompted speculators to unwind their recent favourite trade of going long in risk assets and short in the yen. Traders said investors will likely need to see a clearer sign commodity prices are stabilising before their risk appetite returns. Gold fell 9 percent on Monday, its biggest percentage loss since 1983, spooking many traders. Disappointing Chinese data, talk of large-scale selling by a big fund, and news that the Central bank of Cyprus might sell gold reserves were cited as possible reasons, though traders are unsure exactly what has caused such a big slide. Spot gold last stood at $1,366.0 per ounce, up 0.6 percent in Asia. "When investors suffer a massive loss in one asset, they often have to make up for losses by unwinding trades that are still in the money. The dollar/yen and cross/yen should be one of the best candidates given their sharp gains in recent months," said another Japanese bank trader. G20 IN FOCUS Selling in the yen also lost momentum this week after the United States said late last week in its currency report it would watch Japan's policies to ensure Tokyo was not devaluing the yen to gain competitive advantage for exports. "Many players had positioned themselves for the dollar's rise above 100 yen and now they were forced to dump the dollar. But looking at the U.S. currency report, you get the impression while the U.S. and other countries may accept the 90-95 yen range, they don't welcome 95-100 range," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank. Investors are refraining from yen-selling ahead of the Group of 20 meeting in Washington from Thursday, thinking other countries may protest against or even seek to stem the yen's rapid decline -- which accelerated after the BOJ's easing campaign started on April 4. The Australian dollar rose 1.4 percent against the yen to 100.83 yen, though it still has not recouped even a half of its 3.9 percent dive on Monday, which was its biggest daily fall in nearly two years. Against the U.S. dollar, the Aussie traded at $1.0360 , up 0.4 percent so far on the day after Monday's 1.8 percent fall, which took the Aussie unit to a one-month low of $1.0291. Recovery in risk currencies also helped the euro gain, though the common currency mostly took to the backstage. It last fetched $1.3074, up about 0.2 percent from late U.S. levels but off Thursday's one-month high of $1.3138. Link this Share this Digg this Email Reprints

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