FOREX-Dollar stays close to 2-month high vs. yen on Fed, BOJ views

Reuters

* Euro pushes close to four-year highs vs yen

* Speculators' yen-short positions rising

By Lisa Twaronite and Ian Chua

TOKYO/SYDNEY, Nov 18 (Reuters) - The dollar and euro stuckclose to recent highs against the yen in Asia on Monday, thoughuncertainty about how long the U.S. Federal Reserve willmaintain its monetary stimulus capped gains.

"I think the market wants to keep risk-on trading, but somethink the dollar/yen is high and aren't willing to go higheryet," said Masashi Murata, senior currency strategist at BrownBrothers Harriman in Tokyo.

"But I think some people believe the dollar might go higherby the end of the year, so they want to keep their longpositions in dollar/yen," he said.

Data on Friday showed currency speculators turned even morenegative on the yen in the week ended Nov. 12, having held netshort positions in the Japanese currency since late October.

"Short positioning has become more extreme during four ofthe last five weeks, and is now just marginally above theseven-year low," analysts at JPMorgan wrote in a note toclients.

The dollar added about 0.1 percent to buy 100.25 yen,not far from Friday's high of 100.43 yen, he highest point sinceSept. 11.

The euro rose slightly to 135.21 yen not far fromthe Oct. 22 peak of 135.52, a high not seen since November 2009.

The Fed is poised to taper its monthly bond purchases of $85billion, with most investors expecting the central bank to beginparing by March 2014.

Compared with the Fed and the European Central Bank, theBank of Japan is the most aggressive in providing monetarystimulus as it works to pull the world's third-biggest economyfrom two decades of stagnation. The BOJ will hold a regularpolicy meeting this week and is expected to maintain itsultra-loose policy.

Markets will also be keeping an eye on minutes of the Fed'sOct. 29-30 meeting, due on Wednesday, and a string of speechesfrom Fed officials including Chairman Ben Bernanke, scheduled tospeak on "Communication and Monetary Policy" on Tuesday.

Dovish comments last week from Fed Chairman-nominee JanetYellen have gone some way to assure markets there will be noimminent decision to scale back its massive bond-buyingprogramme.

Still, investors are keeping a close eye oncoming U.S. datato gauge the timing of any tapering. A key piece on data, due onWednesday, is October retail sales

Uncertainty about when the Fed will move has unsettled thedollar, allowing the euro to rally nearly 1 percent last weekand recoup some of the steep losses suffered in the previous twoweeks. The European unit last traded at $1.3490, nearlate New York levels on Friday.

That, in turn, brought the dollar index down slightlyfrom Friday's late levels. At 0330 GMT, it was at 80.820.

In Australia, minutes of the Reserve Bank of Australia's(RBA) Nov. 5 policy meeting are due on Tuesday. At that meeting,the central bank left interest rates steady at a record low 2.5percent, as expected.

While the RBA has left the door open to more interest ratecuts, it is reluctant to ease further given there is alreadyplenty of monetary stimulus in the economy.

Instead, it is hoping for the currency to weaken in order toprovide more support to Australia's exports and spur a broaderrecovery.

The Australian dollar last stood at $0.9377,slightly higher but down nearly 4 percent since Oct. 23, when itscaled a peak of $0.9758.

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