Reuters: US Dollar Report: FOREX-Dollar rebounds versus yen, longer-term uptrend intact

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FOREX-Dollar rebounds versus yen, longer-term uptrend intact Jun 10th 2013, 12:05 Mon Jun 10, 2013 8:05am EDT * Dollar regains footing versus yen * Stabilising stocks, better U.S. data helps dollar * Uncertainty on Fed stimulus withdrawal remains By Anooja Debnath LONDON, June 10 (Reuters) - The dollar rose against the yen and other major currencies on Monday, as equities stabilised and the U.S. currency extended gains made after an encouraging U.S. jobs report data last week. The dollar found support after Japanese equities closed almost 5 percent up on the day while European shares stabilised to last trade flat. Prospects of the Federal Reserve scaling back its stimulus in coming months could also continue to help the dollar, but strategists said in the near-term the lack of clarity on when this would happen could lead to some volatility in the currency. The dollar was up 1.34 percent at 98.83 yen, around 4.0 percent above Friday's trough of 94.98 yen, which marked its lowest since the Bank of Japan unveiled aggressive monetary easing on April 4. Traders reported offers up to 99.50 yen but bids around 98.00 yen. The dollar saw its worst weekly performance against the yen since mid-2010 last week, but strategists said further losses would be limited as dips in the pair were still considered good buying opportunities. "Last week with elevated nerves about what Fed tapering means and when it could start, we saw this knee-jerk rush to safe heavens, like the yen," said Sara Yates, global head of FX strategy at JP Morgan Private Bank. "I think what we are seeing at the moment in the market is the unwinding of that." Yates said while in the near-term there was scope for more volatility in dollar/yen, the dollar is forecast to rise to 105 yen in 12 months, given the BoJ's aggressive stimulus plan and as talk about how and when the Fed may slow its pace of asset purchases gains momentum. The dollar recovered from heavy losses against the yen after data on Friday showed that U.S. employers had added a slightly above-forecast 175,000 jobs in May. But analysts said this did not point to a sustained recovery in the economy and the dollar remained vulnerable to weak U.S. data. "(The jobs data) hasn't changed the market's view much on the timing of Fed tapering," said Kasper Kirkegaard, currency strategist at Danske Bank, adding that the dollar was likely to react more to weaker than stronger U.S. data because the market still held hefty bets of dollar gains. The dollar was also boosted by an upward revision to Japanese first quarter economic growth. This lifted Japanese equities, which typically causes the yen to fall. Markets will focus on the BOJ's two-day policy meeting, that ends on Tuesday, for Governor Haruhiko Kuroda to address the recent market volatility, but analysts said it was unlikely the central bank will announce any decisive measures. "Markets will be looking for details from Kuroda but the risk is that those details won't be forthcoming and that can see the yen strengthen a little bit and dollar/yen get buffeted around a bit," said Yates. The euro was flat at $1.3212 against the dollar and up 1.21 percent against the yen at 130.57 yen. Link this Share this Digg this Email Reprints

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