Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

FOREX-Yen falls as Japanese banks spur dollar buying

Published 08/31/2011, 11:55 PM
Updated 09/01/2011, 12:08 AM

* Aussie solid after retail and capex data

* Kiwi down on profit-taking after Brazil rate cut

* Swissie holds on to gains, seen advancing further

* Euro nurses overnight losses, plays prevailing range

By Antoni Slodkowski and Hideyuki Sano

TOKYO, Sept 1 (Reuters) - The yen fell across the board after dollar buying by Japanese accounts spurred more broad-based purchases of the greenback, lifting it above 77 yen and soothing jitters that another round of intervention by Tokyo authorities may soon be on the way.

The dollar was pushed to a session high of 77.25 yen after a British fund, some U.S. accounts and several Tokyo banks followed a major Japan bank that made large dollar purchases in what appeared to be a specific transaction unrelated to fundamentals or particular positions, traders said.

"The amounts (of dollars bought) are massive and I don't see the dollar trimming these gains today. Normally whenever it's bought the dollar tends to get quickly pushed down, but today is different," said a trader for a Japanese bank.

"It could be some sort of unwinding after end-of-the-month transactions yesterday or inflows from pension funds," said the trader, with other players citing beginning-of-the-month dollar demand from importers ahead of local fix.

The dollar last traded up 0.4 percent at 77 yen. The move pushed the yen down against other currencies, with a fall to a one-month trough versus the Aussie, down 0.5 percent at 82.37 . It also lost 0.6 percent against the euro to 110.57 .

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

The Aussie gained broadly as positive Australian retail sales and capital spending data beat market expectations, helping to offset the negative impact of a rate cut by the Brazilian central bank.

The Aussie rose 0.2 percent to $1.0707, up from the day's low of $1.0660 and at one point hitting a one-month peak of $1.0723.

The rate cut -- the first in two years -- was taken by some market players as another sign of weakness in the global economy, prompting them to take profits on the recently outperforming New Zealand dollar. The Kiwi fell 0.4 percent to $0.8502 .

HOLDING ON TO GAINS

The Swiss franc on Thursday held on to gains scored the previous day after a top government official said Switzerland would have to live with a strong currency.

The Swissie stood at 0.8065 francs per dollar , having risen to 0.7994 on Wednesday and off a five-week low of 0.8223, in a sharp move that led some traders to think the franc's bear market since early August may have run its course.

The franc, which has been a safe haven for investors worried about the euro zone's debt crisis, also stood at 1.1585 franc per euro , off a seven-week low of 1.1971 hit on Monday.

"Given the franc's strong fundamentals, such as that Switzerland is running a current account surplus and it is a net creditor nation, the franc's fall would be unsustainable," said Junya Tanase, chief currency strategist at JPMorgan Chase.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Speculators cut their bets against the franc after Switzerland Economy Minister Johann Schneider-Ammann said on Wednesday that the country had to live with a strong franc for now.

"We'll have to keep living with the strong franc for some time. It must be a combination of measures that will lead us into the future," he said.

The SNB has been conspicuously absent from the currency forwards market since last week. It did not take any new measures after making an announcement on three of the last four Wednesdays in August.

"The latest moves are driven by short-term trading by speculative accounts and are purely based on their speculation. Investors are hardly moving and keeping their long positions in the Swiss franc," said a trader at a European bank.

The euro nursed overnight losses against the dollar on persistent worries over how the fragmented currency bloc will deal with its debt crisis, although support at last week's low around $1.4320 is seen solid for now as many market players are looking ahead to U.S. manufacturing and jobs data.

It last traded at $1.4373 , off a two-month high at $1.4550 hit at the start of the week, although traders added that the currency was essentially playing a well-trodden range, with Asian sovereign demand offsetting negative news from the euro zone.

Traders are looking at more downside with reports of stop-loss orders at $1.4350, although bids are seen at support around $1.4320-30, where the euro bounced strongly last week. It has support from the 55-day moving average around that level as well. (Editing by Edmund Klamann)

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.