FOREX-Yen selling resumes, Aussie hit by intervention talk

Reuters

* Yen falls to fresh 4-yr low vs EUR, 4-mth low vs USD

* Market back to selling yen to fund carry trades

* Aussie slides to 2-1/2 month low vs EUR & USD

* RBA Stevens says 'open-minded' about intervening to weakenAUD

By Ian Chua

SYDNEY, Nov 22 (Reuters) - The yen fell to a fresh four-yearlow against the euro early in Asia on Friday, left exposed afterpromising data in both Germany and the United States underpinnedthe single currency and the U.S. dollar.

Investors also dumped the Australian dollar after thecountry's central bank chief said he was "open-minded" aboutintervening to weaken the currency.

The euro climbed as far as 136.45 yen, reachinghighs not seen since October 2009, while the U.S. dollar scaleda four-month peak of 101.19 yen.

There was little reason for investors not to continue usingthe yen as a funding currency for carry trades after the Bank ofJapan stayed committed to its ultra-loose monetary policy onThursday.

Against the dollar, the euro bounced to $1.3477 froma one-week low of $1.3399. That saw the dollar index dipto 80.965, recoiling from a 1-1/2 week high of 81.290.

Aiding the euro, ECB President Mario Draghi shot down amedia report that said the central bank was actively consideringcutting a key interest rate below zero.

A survey showing Germany's private sector grew faster inNovember helped offset disappointing outcomes elsewhere,particularly a tumble in French business activity.

U.S. data were also encouraging, although they were notstrong enough to change market expectations that the FederalReserve will scale back stimulus early next year.

Factory output rebounded this month, while the number ofAmericans filing new claims for jobless benefits fell sharplylast week.

BNP Paribas analysts said they remained reluctant to chaseany strength in the U.S. dollar, noting that front-end Treasuryyields remained anchored despite the recent move higher inlong-end yields.

"Moreover, we expect U.S. data over the next few weeks to betoo inconclusive to support the incipient rebuilding of Decembertapering hopes," they added.

"With Fed expectations in flux we prefer to avoid direct USDexposure now, focusing instead on short EUR and short JPY crosstrades."

Another standout mover was the Australian dollar, whichsuffered heavy falls after Reserve Bank of Australia GovernorGlenn Stevens stepped up his rhetoric against the currency,which he has long argued was overvalued when judged againsteconomic fundamentals.

While Stevens made clear that intervention was not withoutrisks, markets were in the mood to sell the Aussie especiallyafter a closely watched report showed China's factory sectorgrew at a slower pace in November.

The Aussie skidded to a 2-1/2 month low of $0.9198 before edging back up to $0.9230. The euro soared to a 2-1/2month high of A$1.4621, breaking above key resistancelevels that could pave the way for a retest of the August highof A$1.5029.

There is little in the way of major economic data out ofAsia on Friday. In Europe, the focus will be on the Ifo thinktank's German business climate index.

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