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* Dollar rises after three days of losses vs yen
* Swedish crown hit by signs central bank to cut rates
* Dealers say central bank reserve moves supporting euro
By Gertrude Chavez-Dreyfuss
NEW YORK, April 9 The dollar rebounded from one
of its worst performances against the yen on Wednesday as the
outlook for the greenback brightened on expectations for
stronger economic data given better U.S. weather conditions.
The dollar on Tuesday posted its largest one-day fall versus
the yen in more than seven months, with investors buying back
the Japanese currency after the Bank of Japan held off on
additional monetary easing. The greenback's bounce was the first
in four days.
"Our view going into 2014 is broad-based dollar rally
predicated on the acceleration of the U.S. economy and rising
U.S. rates," said Mark McCormick, currency strategist, at Credit
Agricole in New York.
"A lot of that has been on the back burner given the
murkiness of U.S. data due to the weather impact. But we expect
that to change and in fact, we're already starting to see
pockets of strength in some of the leading indicators and some
of the survey-based measures."
After hitting lows of 101.52 yen in U.S. trade on
Tuesday, the dollar recovered to trade 0.1 percent higher at
101.94 on Wednesday. The euro was also up 0.2 percent at 140.76
Investors are also focusing on the minutes of the latest
Federal Reserve meeting to be released on Wednesday. They are
likely to show that members of the Federal Open Market Committee
generally agreed on tapering the Fed's bond-buying program.
Analysts will also look for clues about the interest rate
cycle given mixed signals from several recent Fed speakers.
Chicago Fed President Charles Evans, a well known non-voting
dove, suggested on Tuesday that with low inflation in the United
States and globally, one of the biggest risks is prematurely
withdrawing from an accommodative policy.
On the other hand, Philadelphia Fed President Charles
Plosser, a voting hawk, had suggested that quantitative easing
is not the answer to low inflation.
The Swedish crown, meanwhile, was one of the biggest movers
on Wednesday, falling versus the euro, after the Riksbank
signalled it was moving closer to cutting interest rates.
Dealers from Scandinavian banks said the central bank's
lowering of its projected path for rates opened the way to a
push towards 9.05 crowns per euro, although there would be some
caution ahead of inflation numbers due on Thursday.
The euro rose 0.4 percent against the Swedish crown to 8.978
One striking trend on the majors since last week is the
euro's resilience in the face of signals from the European
Central Bank that it is prepared to consider outright money
printing to support growth if need be.
A number of dealers said the euro zone common currency was
being supported by China's need to re-order the balance of
currencies it holds in its reserves after buying billions of
dollars last month to weaken the yuan. Similarly, many pointed
to signs of intervention by South Korean authorities overnight
that may support the euro.
The refloating of the euro zone's struggling southern states
on bond markets, exemplified on Wednesday by Greece's
announcement of its first bond sale in four years, has also
drawn capital back into Europe this year.
"A lot of people thought the euro would go lower (after the
ECB last week), then it didn't," said Graham Davidson, a
currency trader with NAB in London.
"I think there are two reasons for that: the euro is still
supported by a solid trade surplus and there have been some
signs of reserve diversification by a number of central banks."
The euro was up 0.1 percent against the dollar at
$1.3814, and firmly in the upper half of its recent range.
(Additional reporting by Patrick Graham in London; Editing by