Tuesday September 29, 2009 - 10:10:42 GMT
Share This Story
Reuters - www.reuters.com
FOREX NEWS-Dollar edges higher vs yen; euro eases
* Dollar up on day vs yen but holds below 90 yen
* Japan's Fujii says won't rule out intervention
* ECB's Trichet strong-dollar comments weigh on euro
* Euro zone sentiment at 82.8 in Sept, beats forecasts
(Adds data, updates prices)
By Tamawa Desai
LONDON, Sept 29 (Reuters) - The dollar edged up against the yen on Tuesday in a corrective move after steep gains the previous day as Japan's finance minister backtracked over its tolerance of a stronger yen.
But the rebound was seen limited as markets still saw room for the yen to rise.
Finance Minister Hirohisa Fujii said he would not rule out taking action if currency moves were irregular but that not promoting a weak currency was the correct policy. [ID:nT321333]
He spoke after backtracking on Monday from remarks suggesting he was comfortable with recent yen strength but markets were generally unconvinced.
"In contrast to other countries talking down their currencies, Japan is the only country encouraging a stronger currency so even if authorities continue to backtrack, the market has a strong perception they will allow the yen to strengthen," said Lee Hardman, currency analyst at Bank of Tokyo-Mitsubishi UFJ.
By 0904 GMT, the dollar was up 0.1 percent at 89.75 yen, after briefly recovering above 90 yen. It had hit an eight-month low of 88.23 yen on Monday.
Market players may still attempt to push the dollar toward January's 13-year low of 87.10 yen and only then think seriously about the possibility of intervention, analysts say, though many say a drop through 85 yen would more likely be needed.
Traders said dollar/yen was also being whipped around by flows related to the fiscal half-year end in Japan, with dollar demand from Japanese companies prompting more short-covering by speculators but with Japanese exporters also selling dollars.
"September is generally a month of yen strength," BTM-UFJ's Hardman said.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was flat at 77.065 .DXY. Technical factors indicate dollar softness has yet to reverse -- the dollar index has yet to trigger a minor double bottom and has pulled back a bit from the top of a downtrend channel from March.
The euro eased against the dollar as short-term players unwound some euro-buying/dollar-selling positions, traders said.
The single currency was down 0.1 percent at $1.4592 EUR=, after touching a two-week low of $1.4557.
That prompted the euro to hit a session low against the yen of 130.72 yen EURJPY=R.
European Central Bank President Jean-Claude Trichet said late on Monday he backed the argument for a strong U.S. dollar in foreign exchange markets. [ID:nLS402293] This sentiment was repeated by ECB Governing Council member Ewald Nowotny.
"The dollar comments were stronger than previous commentary and reflect concern regarding the impact of a stronger euro on the euro zone economic recovery," said Geoffrey Yu, currency analyst at UBS.
The market barely reacted to data showing euro zone economic sentiment improved slightly more than expected in September, to 82.8 from 80.8 the previous month and beating forecasts of 82.2. [nLT517508]
Markets were keeping an eye out for a Conference Board report expected to show U.S. consumer confidence increased in September, compared with August, and for U.S. house price data for July, also forecast to show a rise.
(Editing by Nigel Stephenson)
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."