Reuters: US Dollar Report: FOREX-Yen soft on hopes of diplomatic solution to Syria crisis

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FOREX-Yen soft on hopes of diplomatic solution to Syria crisis Sep 11th 2013, 00:12 Tue Sep 10, 2013 8:12pm EDT * Yen near 7-week low vs dollar, multi-year low against EUR, GBP * Market focused on Obama's televised speech on Syria * Solid Chinese data raises hopes of recovery in China By Hideyuki Sano TOKYO, Sept 11 (Reuters) - The yen was soft while the euro and risk currencies held firm on Wednesday on hopes a U.S. military strike against Syria may be averted, as well as signs of strength in the Chinese economy. The dollar traded at 100.40 yen, having risen as high as 100.47 yen on Tuesday, its highest level in seven weeks, as Syria accepted a Russian proposal on Tuesday to give up chemical weapons, raising hopes of a diplomatic solution. "Possible easing in tensions over Syria could even strengthen conviction in markets that the Federal Reserve will taper its stimulus. I expect the dollar to stay above 100 yen as the market prices in the Fed's tapering," said a trader at a Japanese bank. The Japanese currency was broadly weak, having hit a four-month low against the euro and a four-year low against sterling. The euro rose to 133.31 yen on Tuesday, within sight of a three-year high of 133.82 yen hit in May, and last stood at 133.17 yen. The pound has handily exceeded its May peak to hit a four-year high of 158.04 yen and last traded at 157.93 yen. The euro held firm against the dollar, fetching $1.3265 , having gained for three consecutive days after hitting a seven-week low of $1.31045 late Friday. The pound fared even better, thanks to recent signs of a recovery in the UK economy, closing in on its June 17 peak of $1.5753. It last stood at $1.5730. Still, with the outcome of the chemicals weapons crisis over Syria far from certain, an immediate market focus is on U.S. President Barack Obama's televised address at 0100 GMT. Also whetting investors' risk appetite was a string of solid data out of China, including stronger-than-expected industrial output that reinforced other signs that China's economy was stabilizing after slowing for more than two years. Signs of recovery in China have helped to boost the Aussie to a seven-week high of $0.9320, a strong resistance point . It last traded at $0.9300. This improving trend has emerged just as major development economies brace for potential fallout from an expected trimming of the U.S. Federal Reserve's QE3 stimulus programme. Although the U.S. jobs report last Friday fell short of market expectations, many investors expect the Fed to start reducing its bond-buying programme at next week's policy meeting. Link this Share this Digg this Email Reprints

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