* Risk aversion and repatriation flows boost yen
* Ratings agency comments weigh on sterling, euro
* China"s commitment to buy Treasuries helps dollar (Adds comments, details, changes byline)
By Vivianne Rodrigues and Nicholas Olivari
NEW YORK, March 9 (Reuters) - The safe-haven yen gainedbroadly on Tuesday amid Japanese repatriation flows, while theeuro declined on concerns peripheral euro zone economies couldface debt problems similar to those of Greece.
Appetite for risk had been boosted by Friday"s better-than-expected U.S. employment report, pushing the yen down totwo-week lows versus the euro and the dollar.
But comments from Fitch Ratings on Portugal"s austeritymeasures on Tuesday prompted a comeback for the yen andtriggered further selling in the European currency. The dollarwas supported after China said it was committed to buying U.S.Treasuries. For details, see [ID:nLDE6281JZ] and[ID:nBJC002514]
"The combination of today"s risk-averse trading andrepatriation of yen has been the key driver over the last 12hours," said Camilla Sutton, currency strategist at ScotiaCapital in Toronto.
Traders said Japanese exporters were in the market buyingyen fairly actively, with further demand for the Japanesecurrency likely in the run-up to fiscal year-end on March 31.
"The feeling is that we are beginning to see fiscalyear-end repatriation flows for Japan. The yen will remain infavor over the next few weeks as Japanese corporates bringmoney back home," said RBC currency strategist Adam Cole, inLondon.
Further yen gains could however be limited by speculationthat the Bank of Japan may take additional steps to easemonetary policy. The BOJ is in the spotlight after the Nikkeinewspaper reported on Friday that the central bank wasexamining easing again and may decide on such a move when itmeets on March 16-17.
In early afternoon New York trade, the dollar JPY= wastrading down 0.4 percent at 89.92 yen.
The yen was up about 0.5 percent against the Canadiandollar JPYCAD=R, 0.9 percent against the Swiss francJPYCHF=R, 0.6 percent against the euro JPYEUR=R and 1.1percent against the pound JPYGBP=R.
Higher-yielding currencies such as the Australian dollaralso fell against the Japanese currency. Aussie/yen AUDJPY=Rslipped 0.2 percent.
DOLLAR GAINS
The dollar index .DXY, a non-traded calculation of thedollar"s performance against a basket of currencies, was up 0.2percent at 80.543.
China, the world"s biggest holder of foreign exchangereserves, renewed its commitment to the U.S. Treasury market onTuesday but said it would be wary of substantially boosting itsgold holdings.
"If China is not diversifying their reserves into gold,then there is no realistic alternative to absorb their demandoutside of U.S. dollars," said Kathy Lien, director of researchat GFT in New York.
The pound was under widespread pressure, dropping to aone-week low versus the dollar GBP= after ratings agencyFitch said Britain"s sovereign credit profile haddeteriorated.
Earlier, a Moody"s Investors Service report saying Britainfaces a difficult balancing act in deciding how and when toreduce support for the banking sector had also weighed on thepound. [ID:nLDE6271OB]
Against the dollar the pound was down around 0.4 percent at$1.4992.
The euro was down around 0.2 percent against the dollarEUR= at $1.3579, continuing to struggle in the face of debtconcerns in euro zone countries such as Greece and Portugal.
Fitch Ratings said on Tuesday it still has a negativeoutlook on Portugal"s AA ratings and was studying the detailsof the country"s new austerity measures announced a dayearlier.
"Even though Fitch also stated that the contagion risk toPortugal and Spain from Greece is not great, there aresufficient worries in the market concerning EMU to keep theeuro "on the back foot"," said FOREX.com analysts in a note.
Greek Finance Minister George Papaconstantinou said onTuesday in Washington the country was taking necessary steps toget its budgets under control but said the issue was also aEuropean one. [ID:nWEN1451].
Greece has been a drag on the euro in 2010, which has lost5 percent against the dollar so far this year and 8.1 percentagainst the yen. (Additional reporting by Neal Armstrong in London; Editing byAndrea Ricci) (vivianne.rodrigues@reuters.com ; +1 646 223 6102; ReutersMessaging: vivianne.rodrigues.reuters.com@reuters.net ))
Currencies
No comments:
Post a Comment