Sunday September 8, 2013 - 23:42:38 GMT
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Reuters - www.reuters.com
FOREX NEWS - Yen slips after Tokyo Olympics win, China data eyed
* Investors sell yen in anticipation of Nikkei rally
* Tokyo beats Istanbul to host the 2020 Olympic Games
* China inflation next in focus after good trade data
By Ian Chua
SYDNEY, Sept 9 (Reuters) - The yen fell against the dollar and euro first thing on Monday, reversing most of the gains made late last week as investors positioned for a rally in the Nikkei after Tokyo won a bid to host the 2020 Summer Olympics.
The dollar jumped around 70 pips to 99.83, while the euro climbed to 131.46 yen from around 130.60 late in New York on Friday.
Tokyo's win could mean a noticeable bump for the economy as it gears up for the Games. The Tokyo bid committee reckons hosting the Olympics would boost the economy - from construction and higher prices - by 3 trillion yen ($30.14 billion) over the coming seven years.
Traders expect a bullish start for the Nikkei and sold the yen given both stocks and currency have traded in an inverse relationship in recent months.
"Although the majority of Japanese seemed to have thought Tokyo's victory was highly likely, such views seemed not to have been shared by foreign investors necessarily, partly due to the toxic water problem at Fukushima nuclear plant. Therefore, the news could be seen as a positive surprise," analysts at JPMorgan wrote in a client note.
The decline in the yen helped the dollar regain most of its losses on Friday after disappointing U.S. jobs numbers raised questions about whether the Federal Reserve will actually begin to scale back its massive stimulus programme next week.
But comments from two Federal Reserve officials suggested the tapering plan is still on track. Esther George, the Kansas City Fed's consistently hawkish leader said she favoured trimming the bond-buying programme. Chicago Fed President Charles Evans said he could be swayed towards a pullback.
That should give investors the confidence to buy the dollar on any dips, traders said. The euro was a touch softer in early Asian trade at $1.3173, trimming a bit of Friday's 0.5 percent gain. The dollar index edged up 0.1 percent, steadying from Friday's 0.6 percent fall.
Also in favour, the Australian dollar reached a three-week high around $0.9222, further benefiting from Chinese trade data that added to evidence that the world's second-biggest economy may have avoided a sharp slowdown.
More gains for the Aussie will depend on whether China's inflation data, due at 0130 GMT, and industrial output and retail sales on Tuesday, continue the improving theme. China is Australia's single biggest export market.
Investors barely reacted to the outcome of the national election, which as expected, saw Australia's conservative Liberal-National Party coalition swept into power as investors overwhelmingly voted out the Labor Party.
Still, some analysts expect business confidence could bounce now that the election is out of the way and with the coalition tending to be seen as more pro-business.
"The removal of election uncertainty and the decisiveness of the win by the Coalition are factors likely to boost confidence," said Craig James, chief economist at CommSec.
© Thomson Reuters 2011. All rights reserved.
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