FOREX-Yen gains on profit taking, dollar losses pause
forex markets news,forex markets ,forex trading
Yen gains broadly on profit taking after risk rally
Euro little changed, hovers hear year’s high vs dollar
* European July services PMI show economies nearing recovery
By Naomi Tajitsu
LONDON, Aug 5 - The yen gained broadly on Wednesday as traders locked in profits from a rally in currencies perceived to be higher risk, while the euro consolidated just under its highest level of 2009 hit against the dollar earlier in the week.
The dollar was little changed against a currency basket as the safe-haven U.S. currency found its footing after plumbing its weakest level of 2009 early this week due to escalating risk demand, but risks were seen tilted in favour of more selling.
Analysts said the market was taking a breather following the rally in currencies perceived to be higher-risk, while investors awaited policy announcements by the European Central Bank and the Bank of England on Thursday for more clues into their outlook for interest rates and quantitative easing.
“A lot of objectives in cross/yen have been reached,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank in London, noting that the Australian dollar had breached 80 yen, while sterling/yen has rallied above 160 yen.
“As a result we’re seeing some profit taking,” he said, adding that much of the flows seen on Wednesday were being driven by speculators.
At 0800 GMT, the euro <EUR=> was unchanged around $1.4400, recovering slightly from early losses after purchasing managers’ indices for services sectors in the euro zone generally showed improvement in July. [ID:nLAG003648] The pair hovered below $1.4445 hit on Monday, its strongest since mid-December.
IFR reported that around 250 million euros’ worth of options at $1.44 were due to expire later in the day, which analysts said may result in whippy trade.
Against the yen, the common currency <EURJPY=R> fell 0.3 percent to 136.73 yen, retreating from around 137.70 yen touched on Tuesday, its highest in nearly two months.
The yen rose broadly, pushing the dollar <JPY=> down 0.3 percent to 94.95 yen. Options worth around $450 million parked at 95.00 yen were also due to expire during New York trade, IFR reported, which market participants said may likewise cause some volatility around that level.
The higher-risk Australian and New Zealand currencies each fell roughly 0.7 percent against their Japanese counterpart.
The New Zealand dollar retreated from 64.35 yen <NZDJPY=R> hit earlier in the day, its highest level of the year.
Sterling <GBPJPY=R> fell 0.4 percent to 160.62 yen, after rallying to a two-month high above 162 yen on Tuesday.
Despite the pullback in riskier currencies, analysts said the trend for higher stocks and oil prices would keep risk appetite buoyant on the view the global economy is improving. This would keep the dollar vulnerable to more losses, they said.
“It’s still so much about risk appetite,” said Carl Hammer, currency strategist at SEB Bank in Stockholm. “In the coming week or two we may see another bout of dollar weakness.”
Technical analysts at the bank said euro/dollar was finding support in the lower $1.43 region, and that the next target for the pair was around $1.47, roughly around a record high hit in December
