* Dollar reverses early gains to trade down 0.3 percent vs
* Investors look to U.S. GDP, jobs data after strong ISM
* Euro retreats from five-year high vs yen but rises vs
By Wanfeng Zhou
NEW YORK, Dec 3 The yen rose against the dollar
and the euro on Tuesday, rebounding from losses as falling stock
markets worldwide prompted safe-haven demand for the Japanese
The dollar slipped against the euro and a basket of
currencies but the decline could be short-lived on a view that
the Federal Reserve may begin to reduce its huge bond-buying
economic stimulus earlier than some had anticipated.
After a strong U.S. ISM factory report on Monday, investors
are now looking to U.S. economic growth data on Thursday and, in
particular, U.S. nonfarm payrolls numbers on Friday for further
signs of when the Fed may act.
The dollar fell 0.5 percent to 102.49 yen after
reaching 103.37 yen in Asian trading, according to Reuters data.
That was close to its 2013 high of 103.73 yen, a level dollar
bulls have been targeting.
"The yen caught a reprieve from extreme selling as a solid
coat of red across global bourses spurred a round of safe-haven
interest," said Joe Manimbo, senior market analyst at Western
Union Business Solutions in Washington.
"Sentiment, though, remained decidedly bearish on the view
that the Bank of Japan will press ahead, and maybe extend, its
current pace of support to the world's No. 3 economy."
Trading volumes of dollar/yen were almost double the average
over the past month, according to data from the Reuters dealing
platform. The dollar is up 18 percent against the yen this year
and rose strongly over the past month, on expectations the U.S.
would soon scale back its bond-buying program while Japanese
monetary policy remained loose.
The BoJ's commitment to easy policy makes the yen the best
funding currency for investing in higher-yielding assets in
so-called carry trades. When riskier assets such as stocks fall,
investors would buy back the yen, giving it a perceived safe-
Net yen short positions were at their highest since July
2007, according to data from the Commodity Futures Trading
"There are certainly signs that short positioning is
becoming more stretched at current levels, while our short-term
valuation model is signalling the yen is becoming more
undervalued," said Lee Hardman, currency economist at BTMU.
"The key is the payrolls report on Friday," BTMU's Hardman
said. "If it's another strong report, then it could push
The euro retreated from a five-year high of 140.03 yen to
139.19 yen, down 0.2 percent on the day.
Against the dollar, the euro rose 0.2 percent to $1.3573
on expectations the European Central Bank would leave
interest rates unchanged this week after above-forecast
inflation data last Friday.
"Status quo on ECB monetary policy should persist until the
end of the year, with no negative rates in sight," said
Francesco Scotto, portfolio manager at RTFX Fund Management.
"Euro/dollar is still on a bullish trend and should maintain
this tone until the end of the month."
The Australian dollar was up 0.2 percent against
the U.S. dollar at $0.9124 after data showed solid net exports
in July-September as well as firm retail sales in October.
Earlier, the Reserve Bank of Australia reiterated after a
policy meeting that the Aussie was still uncomfortably high.