Yen subdued; Aussie, kiwi strong near 1-yr high

SYDNEY (Reuters) - The yen and the U.S. dollar were softer on Tuesday, while growth-linked currencies like the Australian and New Zealand dollars held near one-year highs as investors bought amid a broad improvement in risk taking.

Investors were slightly more inclined toward riskier assets like stocks and commodities, encouraged by global finance chiefs' statements at the weekend that it was too soon to start unwinding fiscal, monetary and financial-sector stimulus.

The leaning toward risk comes despite analysts' warnings that asset markets valuations appear overstretched and September is traditionally a time that witnesses some violent corrections.

The euro inched up to $1.4336, having gained 0.3 percent on Monday. On the yen, it was firmer at 133.33 yen, from 133.21 late in London on Monday. Markets in the U.S. were shut on Monday for a holiday.

The U.S. dollar held around 93 yen, although it was slightly lower on a basket of currencies in early Asian trade. The dollar index .DXY is resting on trendline support at 78.00 and a sustained break lower would be quite bearish technically.

The high-flying Australian dollar was strong at $0.8558, not far from a one-year high of $0.8578 struck on Monday, supported by mounting speculation that local rates will rise in coming months after recent upbeat data.

Implied rates are now pricing in a 45 percent chance of a rate hike in October by the Reserve Bank of Australia, after a private sector jobs survey for August showed the local labor market was probably turning the corner.

On Tuesday, another private sector business survey for August is due at 0130 GMT, with the market betting it will show another improvement in activity and confidence.

"The week ahead holds key data that could make or break the case for an October hike," said Sue Trinh, senior currency strategist at RBC Capital. "A weaker headline in the business survey would likely weigh on the Aussie."

Yet, the Aussie is likely to draw support from firm gold prices which were hovering within striking distance of $1000 an ounce level.

The kiwi was steady at $0.6925, having jumped over 0.8 percent on Monday to hit a one-year high of $0.6935. The gains come ahead of a Reserve Bank of New Zealand meeting on Thursday to decide on monetary policy.

The recent surge could draw further jawboning by Governor Alan Bollard, who has expressed his discomfiture with its rise. The kiwi has rallied 30 percent since March, tightening monetary conditions to the frustration of the RBNZ which threatened to cut interest rates at its last meeting in July.

(Reporting by Anirban Nag, editing by Wayne Cole)


Post a Comment