* Dollar/yen supported by Friday's rise in U.S. yields
* Near-term upside for dollar/yen seen limited
* Euro sags, inches away from Friday's 2-week high
By Masayuki Kitano
SINGAPORE, Oct 8 The dollar dipped versus the
yen on Monday, backing off of a two-week high hit late last week
after a surprise drop in the U.S. unemployment rate soothed
investor concerns about the U.S. economy's outlook.
The dollar fell 0.2 percent to 78.55 yen, down from
Friday's high of 78.88 yen hit on trading platform EBS, the U.S.
currency's strongest level since Sept. 19.
The U.S. unemployment rate dropped to 7.8 percent in
September, its lowest level since January 2009, the U.S. Labor
Department said on Friday.
The data triggered a rise in the 10-year U.S. Treasury yield
to its highest level in about two weeks, and helped
the dollar rise versus the yen on Friday, market players said.
Still, a substantial move higher in U.S. bond yields from
here seems unlikely, and any gains in the dollar versus the yen
will probably be limited in the near term, said Mitul Kotecha,
head of global foreign exchange strategy for Credit Agricole in
"The impression I get is just above 79, there is a lot of
sellers out there. The impression we get is a lot of (Japanese)
exporters will be in around that level," he said.
Friday's data is unlikely to be enough to convince market
participants that the U.S. jobs market is headed toward a
strengthening recovery, Kotecha added.
According to a business sentiment survey published by the
Bank of Japan last week, the average dollar/yen exchange rate
assumption that major Japanese manufacturers are using in their
business plans for the six months to March 2013 is 78.97 yen.
That suggests that Japanese exporters may want to sell the
dollar if it rises beyond that threshold, although they are
unlikely to be active on Monday, with Japanese markets closed
for a public holiday.
The euro fell 0.4 percent to $1.2987, pulling away
from Friday's two-week high of $1.3072. Against the yen, the
euro slid 0.5 percent to 102.03 yen.
Comments by German Finance Minister Wolfgang Schaeuble on
Sunday that Chancellor Angela Merkel's trip to Greece this week
did not mean the debt-stricken country would receive the next
tranche of aid from its bailout, helped drag the euro lower,
said a trader for a European bank in Singapore.
Another factor weighing on the euro was Friday's lacklustre
performance by U.S. equities, which bodes ill for European
shares on Monday, the trader said. "So short-term I think it's a
risk-off environment," he added.
A focal point for the euro has been when Spain might make a
request for external aid. Traders and analysts say the euro
could get a boost if Spain makes such a request as that would
open the way for the European Central Bank to buy Spanish debt
to help bring down Madrid's borrowing costs.
The euro has climbed around 7.8 percent since hitting a
two-year low of $1.2042 in late July, bolstered by hopes for ECB
action to help quell the euro zone's sovereign debt crisis.
The single currency has also rallied on the crosses in
recent weeks, having hit a four-month high against the
Australian dollar of A$1.2824 on Friday. The euro
last stood at A$1.2779, down 0.2 percent on the day.
Traders seem increasingly interested in putting on bullish
bets on the euro versus the Australian dollar, said Rob Ryan, a
strategist for RBS in Singapore.
"In euro/Aussie in particular, we've heard a number of
people express an interest in going long," he said.
"In many ways it's a negative expression on Australia.
They're afraid to do it against the (U.S.) dollar because of the
Fed and what that might ultimately mean for the dollar," Ryan
said, referring to the U.S. Federal Reserve's latest round of
aggressive monetary stimulus.
The Australian dollar has been dogged recently by worries
about a slowdown in China, Australia's biggest export market.