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FOREX-Dollar up vs yen on jobs optimism;commodity currencies rise

by on November 1, 2012 9:09 pm GMT
 

Thu Nov 1, 2012 5:09pm EDT

* U.S. ADP, jobless claims data suggest improving outlook
    * Yen dips as risk appetite increases, Japan outlook weighs
    * Investors turn attention to Friday's nonfarm payrolls

    By Wanfeng Zhou and Gertrude Chavez-Dreyfuss
    NEW YORK, Nov 1 (Reuters) - The U.S. dollar rose against the
yen, while commodity-linked currencies also firmed on Thursday
as risk appetite improved after better-than-expected U.S. jobs
data, which suggested the world's largest economy was on a more
stable path to recovery. 
    The euro, on the other hand, slipped against the dollar
after a Greek court ruled the country's pension reform demanded
by foreign lenders may be unconstitutional, raising concerns
about Athens' ability to implement austerity measures needed to
secure aid.
    The common currency had earlier climbed near $1.30 after
encouraging U.S. economic data, which came a day before the
all-important U.S. monthly payrolls report boosted equity
prices.
    Data showed U.S. private-sector employment increased by the
most in eight months in October, while initial jobless claims
fell more than expected last week. 
    Friday brings the U.S. Labor Department report on October
employment, with economists expecting 125,000 new jobs and a
slightly higher unemployment rate of 7.9 percent. 
    "A good jobs report would highlight the favorably growth
differentials on the left side of the Atlantic and reduce
pressure on the Fed to act in support of the economy," said Joe
Manimbo, senior market analyst at Western Union Business
Solutions in Washington.
    A separate report on Thursday showed U.S. consumer
confidence rose in October to its highest in more than four
years as Americans were more upbeat about improvements in the
labor market. 
    The increase in risk appetite weighed on the yen overall, as
traders sold the Japanese currency to fund purchases of stocks
and other assets with better returns.
    The dollar rose 0.5 percent to 80.17 yen, having hit
a session peak of 80.20 and inching toward the four-month high
of 80.36 struck on Reuters data last Friday. 
    The euro also climbed against the yen to 103.74 yen
, up 0.4 percent.
    The Australian dollar gained 0.2 percent to US$1.0398
, while the New Zealand currency rose 0.6 percent to
US$0.8266.
    The euro, however, slipped 0.1 percent to $1.2941,
after hitting a session high of $1.2982.
    The Court of Auditors in Greece, which vets Greek laws
before they are submitted to parliament, said measures such as
increasing the retirement age by two years to 67 and cutting
pensions by between 5 and 10 percent could be against the
constitution. 
    "Predicting Greek political crises is rather like crying
wolf, but we think the current situation presents greater risks
than any Euro area challenge since the summer," said Alex White,
economist at JP Morgan in London. 
    Some traders said selling in the euro against sterling also
contributed to weakness in the euro/dollar pair. The euro fell
0.1 percent to 80.24 pence.
    
    YEN WEAKNESS
    The yen was also weighed down by an increasingly grim
outlook for the Japanese economy and importers selling the
currency.
    Some traders said many investors were seeking to buy the
dollar on any dip in its value against the yen, targeting a rise
to 83-84 yen in the coming months as bets grow that the Bank of
Japan will have to take additional monetary easing measures to
fight off deflation.
    Recent Japanese data, and most corporate earning reports,
have been soft and third-quarter gross domestic product, due on
Nov. 11, is also likely to contract - all of which should cause
the yen to cede ground, strategists said.
    "We are long dollar/yen because the data out of Japan, the
corporate earnings, have all been pretty weak and will put
pressure on the BOJ to ease," said Stuart Frost, head of
Absolute Returns and Currency at fund managers RWC Partners.
    "We will look to buy on dips, targeting a rise to 80.60 yen.
It will be an eventual grind higher toward 84."
    Analysts said corporate currency flows tend to favor the
dollar these days because of Japan's trade deficit - a change
from just a few years ago, when exporters' yen buying dwarfed
importers' yen selling.