* Japan's Amari warns of negative impact of weak yen
* Dollar could gain on safety bid related to debt ceiling
* German data weighs on euro
* Juncker says euro FX rate "dangerously high" - report
By Gertrude Chavez-Dreyfuss
NEW YORK, Jan 15 The yen on Tuesday posted its
best one-day gain against the euro in seven months and rose
against the dollar after falling four straight days, as a
warning from a Japanese minister about excessive yen weakness
prompted investors to pare bearish bets.
The euro, meanwhile, fell against the dollar after three
straight days of gains, pressured by weak German data and
comments from Eurogroup head Jean-Claude Juncker that the euro
zone common currency's exchange rate was "dangerously high."
Juncker's comments ran on Bloomberg News, traders said.
Vassili Serebriakov, currency strategist at BNP Paribas in
New York, was a bit surprised at Juncker's comments, coming as
they did a few days after European Central Bank President Mario
Draghi said in a press briefing that the euro's rate is
currently at its long-term average versus the dollar.
"I don't think this signals a coordinated move among
European officials to talk down the euro," Serebriakov said.
"The euro's move hasn't been that extreme overall."
The euro has risen 0.9 percent against the dollar and more
than 3.0 percent versus the yen so far this year. In the fourth
quarter last year, the euro rose 2.7 percent against the
greenback and surged more than 14 percent versus the yen.
Meanwhile, expectations of aggressive action from the Bank
of Japan to weaken the yen have driven the dollar and euro
sharply higher in recent months. The greenback notched a nearly
11.3 percent gain in the fourth quarter of 2012 and has risen
more than 2 percent so far this year.
However, remarks by Japanese Economics Minister Akira Amari
on Tuesday made investors nervous about the yen's fall. He said
excessive yen weakness could hurt people by raising import
Amari's comments countered remarks made by officials over
the past month that have strongly encouraged yen weakness.
With bets against the yen at lofty levels, many analysts
contend the currency is poised for a short-covering rally,
although it should prove temporary given widespread forecasts of
forceful action from the BoJ to heal Japan's weak economy.
"Considering that dollar/yen has become extremely
overbought, corrections are not surprising but it is important
to realize that Amari's bark is bigger than his bite because the
Japanese would never stand in the way of yen weakness especially
with their economy at its current state," said Kathy Lien,
managing director at BK Asset Management in New York.
The dollar last traded down 0.7 percent at 88.82 yen,
its worst showing in about a week. It hit a trough of 88.27 yen,
but losses were pared in North America following the release of
a mixed batch of U.S. economic data.
U.S. retail sales rose solidly in December while
manufacturing in New York state contracted for a sixth month in
January. Other data showed inflation pressures remained muted,
with U.S. producer prices falling in December for a third
The dollar, however, may fare well over the next month as
investors embrace its safety during a looming battle in
Washington over raising the government's borrowing limit, the
so-called debt ceiling.
The dollar's setback on Tuesday came a day after it hit
89.67 yen, its highest since June 2010.
Bets on aggressive easing from the Bank of Japan have
weighed heavily on the yen in recent months. The BoJ has been
under pressure from newly elected Prime Minister Shinzo Abe to
adopt a 2 percent inflation target to beat deflation.
The BoJ holds its next policy meeting on Jan. 21-22.
Amari's comments also buoyed the yen against the euro, which
last changed hands at 118.17 yen, down 1.3 percent.
That's the euro's best daily performance since June last year.
The euro on Monday hit a 20-month peak at 120.12.
The euro earlier in the session slid on concerns about the
U.S. debt ceiling debate and weak data from Germany, Europe's
The German economy was hit hard by the euro zone crisis in
the final quarter of 2012, shrinking more than at any point in
nearly three years as traditionally strong exports and
investment slowed, the Statistics Office said on Tuesday.
After reaching an 11-month high on Monday, the euro last
traded at $1.3308, down 0.6 percent on the day. It fell
as low as $1.3266 on Juncker's comments in early afternoon
The euro had been rallying in the aftermath of an ECB
meeting last week. Comments by the ECB's Draghi were largely
seen as supportive and served to downplay expectations of a
near-term rate cut.
Despite falling against the dollar and yen, the euro gained
against the Swiss franc, rising to a fresh 13-month high. The
euro rose to 1.2413 francs, its highest since December
2011. It was last at 1.2391, up 0.5 percent.
The Swiss franc has come under selling pressure as concerns
about the euro zone debt crisis have receded, prompting
investors, who had bought the franc as a refuge from the euro's
problems, to cut long positions.