Sunday, August 21, 2011

FOREX-Yen off highs, markets wary of intervention

FOREX-Yen off highs, markets wary of intervention
The dollar edged up against the yen in Asia on Monday, pulling up from a fresh record low plumbed late last week, with investors wary that Japanese authorities will take action to weaken the currency.

The Nikkei reported on Saturday the Japanese government was considering intervening in the currency market, while finance minister Yoshihiko Noda said on Monday Japan would take decisive action against any speculative moves.

"I suspect there is a line drawn in the sand at 76.00. That's a factor which has clearly pushed dollar/yen off the lows," said Greg Gibbs, strategist at RBS in Sydney.

The dollar last traded at 76.76 yen , off a record low around 75.94 plumbed Friday. Traders said there is talk of hefty sell-stops below 75.00, a level Japanese authorities are likely to keep the yen well away from.

Fears the United States will slide back into recession and persistent worries about the euro zone sovereign debt crisis have hit risk appetite and bolstered demand for safe-haven assets in recent weeks.

As a result, both the yen and Swiss franc have risen strongly, spurring the Swiss and Japanese authorities to temper their strength, which is hurting their respective economies.

Swiss newspaper SonntagsZeitung reported on Sunday that pressure is rising on the Swiss National Bank to take further action to soften the Swiss franc, based on a poll of Swiss people it commissioned.

The dollar was last at 0.7860 francs , off Friday's session high around 0.7959, while the euro was at 1.1297 francs compared with Friday's high of 1.1319.

Against the dollar, the euro was a touch softer at $1.4370 , having found the going tough above $1.4400. Traders said there are bids seen in the $1.4340-45 area, a level that is likely to provide first support.

"We still think it will take a lot to test the upper edge of what is now an effective $1.41-1.45 range, with offers likely to be thick ahead of $1.45," BNP Paribas analysts wrote in a note.

They said they expected euro/dollar to move back to the low end of the range ahead of Federal Reserve Chief Ben Bernanke's speech at Jackson Hole, Wyoming, on Friday, or on any euro zone data this week that would increase global recession worries.

At the weekend, Germany strongly rejected mounting calls for the euro zone to issue joint debt to help tackle the crisis. But it signaled it was open for the bloc to move towards a form of fiscal union. Copyright @ 2011 - Theme by NanLimo - Thanks to Google