Reuters: US Dollar Report: FOREX-Yen jumps, commodity currencies slide as risk sentiment sours

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FOREX-Yen jumps, commodity currencies slide as risk sentiment sours Apr 16th 2013, 02:32 Mon Apr 15, 2013 10:32pm EDT * Weaker China data, gold rout, Boston explosion hit risk-taking * Yen-selling loses steam after US report mentions Japan's policy * Aussie licks wounds after sharp fall, gold in focus By Hideyuki Sano TOKYO, April 16 (Reuters) - The yen hit two-week highs while commodity currencies tumbled on Tuesday after disappointing Chinese data, a rout in commodity prices led by gold, and explosions in Boston sapped risk sentiment. 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. The dollar fell as low as 95.67 yen, its lowest since April 4, following reports of explosions near the finish line of the Boston Marathon. It later recovered to 97.04 yen, about 0.3 percent above late U.S. trade but still down about 3 percent from a four-year high of 99.95 yen hit last week following the Bank of Japan's big stimulus launch earlier this month. "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 dollar also briefly extended its decline against the yen after data showed the pace of growth in manufacturing in New York state slowed more than expected in April, adding to concern the global economy may be losing momentum. Traders say the dollar has a cluster of important supports around 96.25-35, including both tenkan and kijun lines on the daily Ichimoku charts. It is also where the currency was at just before it jumped after U.S. payrolls data earlier this month. "Although there have been some disappointing data on the U.S. economy, they did not go so far as to completely change the economic picture. So you could argue that the dollar is likely to rebound from here," said a trader at a Japanese bank. But many traders are wary, saying they need to see commodity prices stabilising before risk appetite returns. Investors bought back the yen against commodity currencies after China's economic recovery stumbled unexpectedly in the first three months of 2013, data showed on Monday, leading to broad declines in commodity prices. The Australian dollar dived 3.9 percent against the yen on Monday, its biggest daily fall in nearly two years, to 99.40 yen and last traded around 100.00 yen. Against the dollar, the Aussie traded at $1.0315, little changed after Monday's 1.8 percent fall. Spooking many traders in particular was a sharp sell-off in gold, which fell 9 percent on Monday, its biggest percentage loss since 1983. Gold extended its fall further in Asia, falling another 1.7 percent to edge near its 2011 low. "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. Reports of explosions near the finish line of the Boston Marathon hurt investor risk sentiment further. A White House official said the twin blasts are being treated as an "act of terror." The euro took to the sidelines and fetched $1.3031, little changed from late U.S. levels after a 0.6 percent fall on Monday and off Thursday's one-month high of $1.3138. Link this Share this Digg this Email Reprints

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