Reuters: US Dollar Report: FOREX-Dollar rebounds vs yen after steep sell-off

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FOREX-Dollar rebounds vs yen after steep sell-off Jun 4th 2013, 13:56 Tue Jun 4, 2013 9:56am EDT * Dollar recovers, moves back to 100 yen * Japan to urge public pension funds to up overseas holdings * Friday's U.S. jobs report key to dollar positioning By Gertrude Chavez-Dreyfuss NEW YORK, June 4 (Reuters) - The dollar recovered against the yen on Tuesday as investors capitalized on the previous day's sell-off to buy back the greenback at lower levels, while a rally in Japanese stocks spurred risk appetite and curbed the need to hold yen for safety. Some analysts also said a Reuters story quoting sources as saying the Japanese government would urge public pension funds - controlling a pool of more than $2 trillion - to increase investments in equities and overseas assets also supported the dollar versus the yen. The dollar was up 0.8 percent at 100.26 yen, with traders citing option expiries at 100 yen that were likely to keep the pair pinned around that level. It had fallen to a four-week low of 98.86 yen on Monday after a survey showed U.S. factory activity fell in May to its lowest since June 2009. "There was a squeeze on long dollar positions, but we know that wasn't going to last because the long-term bullish outlook on the dollar is well-entrenched," said Vassili Serebriakov, currency strategist, at BNP Paribas in New York. On the short-term technical charts, however, the signals suggested the dollar's rally against the yen was temporary. Camilla Sutton, chief currency strategist at ScotiaBank in Toronto said the 50-day moving average around 99.12 yen is providing support and a close below this level would accelerate selling. But a close above Monday's opening price of 100.57 would remove some of the downside pressure, she added. Niels Christensen, currency strategist at Nordea in Copenhagen, further said while news about Japan's pension fund helped the dollar against the yen, the greenback would need more positive news to push it significantly higher. The dollar index, a measure of the greenback's value against six major currencies, also recovered to trade 0.3 percent higher at 82.885. A U.S. manufacturing survey on Monday dimmed prospects of the Federal Reserve scaling back monetary easing soon, even though two Fed policymakers said on Monday the central bank could taper its stimulus in the coming months if data improved. The report from the Institute for Supply Management had triggered a sell-off in the dollar. With the Fed pledging to maintain stimulus until the labor market improves, jobs numbers due on Friday will be under intense scrutiny. The U.S. jobless rate is forecast to remain steady at 7.5 percent in May with the economy expected to add 170,000 new jobs, compared with 165,000 in April. A disappointing number could see long dollar bets being cut while a better-than-expected data would give the U.S. currency a boost. The euro, on the other hand, was 0.1 percent lower at $1.3059, off a peak of $1.3108 reached on Monday, its highest since May 9. Euro zone producer prices fell further in April, marking the biggest month-on-month decrease in nearly four years and keeping alive chances of more interest rate cuts by the European Central Bank. The week's big euro focus will be the ECB's monthly meeting on Thursday at which officials are mostly seen holding interest rates steady. But a post-meeting press conference by ECB president Mario Draghi would come under close scrutiny for clues on the prospects of a rate cut. The Australian dollar, meanwhile, was down more than 1 percent at U$0.9650 after the Reserve Bank of Australia held rates at 2.75 percent and governor Glenn Stevens said easing was still on the table.. Link this Share this Digg this Email Reprints

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