Friday October 17, 2014 - 00:23:19 GMT
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Reuters - www.reuters.com
FOREX-Yen steps back as some calm returns to markets
* Demand for yen softens as Wall St finds a floor
* Sterling broadly firmer as euro stays on defensive
* Speeches by ECB's Coeure and Fed's Yellen next in focus
By Ian Chua
SYDNEY, Oct 17 (Reuters) - The yen started trade on Friday well off its highs after another choppy session overnight where some calm returned to Wall Street thanks to encouraging U.S. data that helped take the edge off global growth jitters.
Also aiding risk sentiment, the head of the St. Louis Federal Reserve Bank, James Bullard, said the U.S. central bank may want to keep up its bond buying stimulus for now given a drop in inflation expectations.
His comments came after data showed the number of Americans filing new claims for jobless benefits fell to a 14-year low last week and industrial output rose sharply in September.
All that helped U.S. stocks eke out the smallest of gains, and dampen demand for the safe-haven Japanese currency. As a result, the dollar climbed to 106.46 yen, pulling away from a five-week low of 105.19 plumbed on Wednesday.
The euro rebounded to 136.35 yen from an 11-month low of 134.15, while the Australian dollar climbed to 93.25 yen from a seven-month trough of 91.72.
"It was largely a cool down session, spiced up by solid U.S. data and a surprisingly dovish comment from Fed member Bullard," analysts at CitiFx wrote in a note to clients.
Sentiment for the euro, however, remained fragile following yet another selloff in peripheral euro zone bonds overnight and a disappointing auction of Spanish debt.
Borrowing costs for some of the bloc's most highly indebted southern states shot higher for a third session as confidence that the European Central Bank could avert another debt crisis in the bloc appeared to have waned.
Data on Thursday showed deflation in Greece, Spain, Italy, Slovenia and Slovakia and the overall euro zone inflation stuck in the ECB's 'danger zone' for a 12th month.
Investors seemed to have found some comfort in sterling as they sold the euro, helping the British currency gain broadly overnight.
Sterling rose to 1.2568 euros, pulling up from a one month low of 1.2422 set on Wednesday. Against the greenback, it reached a high of $1.6095 as it recovered from an 11-month trough of $1.5875 plumbed earlier in the week.
The euro gave back some of Wednesday's gains on the greenback to be at $1.2811, off this week's high of $1.2887.
There is little in the way of market moving data out of Asia on Friday. Later in the day, European Central Bank member Benoit Coeure speaks on 'Have we learnt anything from the crisis' and Federal Reserve Chair Janet Yellen will speak about 'Economic opportunity' at separate events. (Editing by Shri Navaratnam)
© Thomson Reuters 2014. All rights reserved.
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