Yen steady ahead of tankan, US jobs data :: Namibia Internet Gateway cc ::

Yen steady ahead of tankan, US jobs data

Posted by admin on Tuesday, March 30, 2004 - 12:23 PM

TOKYO, March 30 (Reuters) - The yen held near recent three-and-a-half-year highs against the dollar on Tuesday, supported by more signs of a solid economic recovery in Japan, but intervention fears kept investors on a cautious footing.
Analysts said that dealers were also reluctant to take positions ahead of big events later in the week including Japan's "tankan" survey of business sentiment on Thursday, and a policy meeting on the same day by the European Central Bank. The market is also keenly awaiting non-farm payroll figures due on Friday, which are expected to show that U.S. companies are finally hiring aggressively, raising expectations for a quicker end to the Federal Reserve's low-rates stance. "We're looking for 150,000 on the payrolls and an ECB cut, and that would imply a dollar positive outcome. It's possible there'll be a little bit of a squeeze on dollar/yen, maybe to around 106," said Jake Moore, strategist at Barclays Capital in Tokyo. "When that's through, we're going to get a test of 105 (yen) and I think a break through 105 in the next two to three weeks." U.S. non-farm payrolls are expected to have risen by around 100,000 in March, compared to a disappointing figure of 21,000 in the previous month. As of 0556 GMT, the dollar was around 105.60 yen flat from late U.S. levels and not far from its low of around 105.16 yen hit last month. Dealers also remained on the lookout for Japanese authorities amid speculation -- rekindled by a British newspaper report on Monday -- that Tokyo may scale back its yen-selling intervention. "Given that the dollar stopped its fall yesterday just above 105 (yen) on what looked like intervention, the market has decided that at least until the end of March it's a little risky to buy yen," said Mitsuo Imaizumi, deputy general manager of the international bond and forex department at Daiwa Securities SMBC. INTERVENTION IN FOCUS The Japanese authorities intervened heavily in February to stop the dollar from dropping below 105 yen, a level they are seen as keen to support, at least until March 31 when Japan's big exporters close their books for the end of the fiscal year. Finance Minister Sadakazu Tanigaki said once again on Tuesday that Japan's currency policy had not changed and that it would intervene if market rates strayed from fundamentals. Even so, analysts say it is just a matter of time before the market tests the 105 yen per dollar level, given that a recent raft of positive data on Japan's economy was helping fuel a rally in Japanese shares and increasing demand for the yen. The euro, undermined recently by speculation that the ECB may cut rates to shore up a sluggish euro-zone economy, ticked up as some traders bought back the currency ahead of the ECB policy meeting on Thursday. It was quoted at $1.2187 from around $1.2155 in late U.S. trade. Some analysts said the ECB would be patient. "I don't expect a cut this week. The euro may rise a little after the meeting if the ECB does not ease," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp (SMBC). Looking ahead, the market will also be watching the U.S. consumer confidence index compiled by the Conference Board, due at 1500 GMT. Economists polled by Reuters on average expect the index to fall to 86.5 in March from 87.3 in February, hurt by rising gasoline prices and worries about attacks after the Madrid bombings, plus disappointment about the dearth of new U.S. jobs. The market showed little immediate response to Japanese industrial output data released on Tuesday morning. Production fell 3.7 percent in February from January, in line with expectations, after a sharp rise in January. But analysts said a bullish outlook for the April-June period was likely to provide fuel for yen bulls.

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