* German Ifo index higher than forecast
* Yen weakens vs dollar, BoJ's Kuroda says yen not
* Fed's George, Lockhart say December taper on the agenda
* Speculators raise long dollar bets in latest week
By Julie Haviv
NEW YORK, Nov 22 The euro rose to a four-year
peak against the yen and gained for a second straight day
against the dollar on Friday as unexpectedly robust German
business sentiment data raised the appeal of the euro zone
Comments from Federal Reserve officials saying a reduction
in stimulus would be discussed at next month's monetary policy
meeting failed to boost the dollar. Analysts said the market has
already priced in talk of Fed tapering asset purchases in
December, limiting its impact on the greenback.
The euro was last up 0.7 percent at 137.28 yen,
having risen as high as 137.32, its highest since October 2009.
Against the dollar, it gained 0.5 percent to $1.3548.
Germany's Ifo survey of business sentiment rose far more
than forecast in November, reaching its highest since April
2012. That added to positive sentiment about
growth in Germany, the engine of the euro zone economy.
A ZEW survey this week also showed German investor sentiment
at its highest in four years, while a purchasing managers index
suggested the private sector's expansion was gaining traction.
"The enthusiastic IFO report has investors comfortable
increasing exposure to the euro this morning, pushing
euro/dollar back above $1.3500," said Scott Smith, senior
corporate FX trader at Cambridge Mercantile Group in Calgary.
He added that the confidence displayed in Germany during
November is positive overall, but noted that recovery in the
euro zone's largest economy has failed to bolster the rest of
the region, especially the peripheral nations.
Currency speculators raised their bets in favor of the U.S.
dollar to the highest in more than two months in the latest
week, according to data from the Commodity Futures Trading
Commission released on Friday.
The value of the dollar's net long position rose to $17.10
billion in the week ended Nov. 19, the largest since the week
ended Sept. 10. Long dollar bets stood at $14.46 billion the
The euro was also supported by comments from European
Central Bank President Mario Draghi, who played down the
possibility of the bank implementing negative deposit rates.
Reports that the ECB would start charging banks to park cash
with it overnight had pressured the euro on Wednesday, extending
its losses after the release of Federal Reserve minutes later
that day suggesting that U.S. stimulus could be scaled back
earlier than expected.
After months of misfires, the Federal Reserve's message is
finally getting through to Wall Street: to taper is not to
Traders now do not see the Fed raising short-term borrowing
costs until at least July 2015, if not later, based on trading
in CME Group's fed funds futures.
The euro zone's shared currency also shrugged off comments
from ECB Chief Economist Peter Praet that the zone faces
The dollar showed little reaction to comments from Kansas
City Fed President Esther George and Atlanta Fed chief Dennis
Lockhart, who both said that the U.S. central bank will discuss
scaling back its asset purchases at its December meeting.
BoJ Governor Haruhiko Kuroda said earlier he did not think
the yen was at abnormally low levels and he did not see an asset
bubble occurring in Japan.
The Nikkei and yen have been moving in counter-step for
months, with every rally in the share index a signal for
speculators to sell the yen. A weaker yen tends to boost
Japanese exports and earnings, further supporting shares.
Aaron Smith, managing director at currency hedge fund firm
Pecora Capital, said short-term technical factors point toward
buying the dollar versus the yen.
"We are at a crucial level in dollar/yen. If 101-102 fails,
we can see a dive below 100 and resumption of the 300-pip range
in the 97-100 region," he said.
"However, we are cautiously optimistic that a breakout of
further yen weakening is in the cards for 2014."
The dollar hit a four-and-a-half-month high of 101.35 yen
on expectations Bank of Japan monetary policy would
remain loose and a rise in Japanese stocks to six-month
highs on Friday. It was last up 0.2 percent at 101.28 yen,
according to Reuters data.