Reuters: US Dollar Report: FOREX-Dollar takes defensive stance; Aussie awaits RBA decision

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FOREX-Dollar takes defensive stance; Aussie awaits RBA decision Aug 6th 2013, 02:59 Mon Aug 5, 2013 10:59pm EDT * Dollar/yen stays weak after last week's tepid US jobs data * Stop-loss selling helps drag dollar lower vs yen-trader * Aussie awaits RBA rate decision * Kiwi recovers from Fonterra food scare By Masayuki Kitano SINGAPORE, Aug 6 (Reuters) - The dollar slipped versus the yen on Tuesday, staying on the defensive after Friday's U.S. jobs data lowered expectations that the Federal Reserve would start scaling back its monetary stimulus in September. The dollar fell 0.3 percent versus the yen to 97.96 yen , edging back in the direction of a near five-week low of 97.585 yen set last Wednesday. Stop-loss dollar selling at levels around 98.10 yen helped drag the greenback lower, said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore. There was talk of more stop-loss dollar offers down below and such levels could be tested in the near term, if not during the Asian trading session on Tuesday, he added. "I'm hearing stop losses under both 97.50 and 97.00 and I think we can see those levels in European/NY time," Halley said. The dollar index, which measures the greenback's value against a basket of currencies, slipped 0.1 percent to 81.787 , edging away from Friday's near two-week high of 82.494. The dollar may struggle to gain traction against the yen until market players pare back their bullish bets on the greenback even further, said a trader for a European bank in Tokyo. "I think what has been taking place is some sporadic long liquidation, after the market raised its expectations for the jobs data too much before it came out," the trader said, referring to the dollar's drop versus the yen over the past few trading sessions. Further dollar long liquidation may occur if the greenback were to drop to levels around 97.50 yen or so, he said, adding that the dollar may start to stabilise once such position squaring has taken place. The dollar has retreated versus the yen after data on Friday showed that U.S. employers slowed their pace of hiring in July, an outcome that strengthened the view that the Fed could wait until late in the year before scaling back its bond-buying programme, rather than start its tapering in September. The euro held steady at $1.3262. RBA RATE DECISION The focus now is on the Reserve Bank of Australia (RBA) which is widely expected to cut its cash rate by 25 basis points to a record low 2.5 percent. The decision is due at 0430 GMT. "We may see a sharper sell-off in the AUD/USD should the RBA keep the door open to further rate cuts in the coming months," said David Song, currency analyst at DailyFX. "The central bank may retain a dovish tone for monetary policy throughout 2013 as China - Australia's largest trading partner - faces a more pronounced slowdown and continues to face a risk for a hard landing." The Aussie dollar held steady at $0.8930, having set a three-year trough of $0.8848 on Monday. A break there could see the Aussie target the August 2010 low of $0.8770. Also vying for market attention was the New Zealand dollar, which staged a dramatic reversal after hitting a one-year low of $0.7670 on Monday. The New Zealand dollar last stood at $0.7834, down 0.2 percent on the day. Investors initially dumped the kiwi after the country's top exporter, Fonterra, said it found bacteria that could cause food poisoning in some of its products. Fonterra sought to reassure customers on Monday and said it was not facing a ban on all of its products in China, one of its biggest markets. Partly underpinning the New Zealand dollar are expectations that the next move by the Reserve Bank of New Zealand will be a rate hike, even if any action is not likely to be seen until next year. Link this Share this Digg this Email Reprints

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