* Yen capped after US jobs data, Softbank news also weighs
* Aussie, risk currencies underpinned as Asia shares edge up
* Euro steady as Spain's move, ECB bond-buy timing awaited
By Chikako Mogi
TOKYO, Oct 12 The euro steadied on Friday after
snapping a three-day decline the day before when the
International Monetary Fund said indebted euro zone economies
should have more time to cut budget deficits, while the yen was
capped as risk aversion eased.
Markets are stuck in ranges as investors continue to wait
for Spain, the euro zone's fourth-largest economy gasping under
the weight of huge public deficit, to request a bailout and
activate the European Central Bank's new scheme aimed at easing
the refinancing pains of highly-indebted euro zone countries.
"Everyone is still waiting on Spain to request aid and for
the ECB to eventually start buying bonds. Until that really
happens it's hard to see (currencies) break decisively out of
current ranges," said Gareth Berry, G10 FX strategist for UBS in
Singapore, noting that much of the price action was merely
consolidation in current ranges.
IMF Managing Director Christine Lagarde reiterated on Friday
that more time is necessary for Greece. On Thursday, she said
she favoured giving Greece and Spain more time to reduce their
budget deficits because cutting too deeply, too fast would do
more harm than good.
The euro steadied around $1.2928, after hitting a
high of $1.29465 earlier, near Thursday's peak of $1.2952. The
single currency has stayed above key technical support at its
200-day moving average.
Lagarde's comments reaffirmed that the IMF "had to soften
its stance as cutting Greece off the euro zone isn't viable,"
said Mitsuru Yaguchi, senior manager at Bank of Tokyo-Mitsubishi
UFJ's economic research department.
"At the same time, it is quite unclear whether giving more
time for Greece would bear fruit, and that's why markets are
drifting without a clear direction," he said.
Yaguchi said the next focus is "whether euro zone member
countries will also acknowledge that more time should be spent
for Greece, as well as who will provide additional aid for
Greece and how that will be done including the issue of
Traders said other potential catalysts to move markets
either way include the result of review by Moody's Investors
Service on its Spanish credit rating, expected by the end of the
month, with markets seeing the risk of a cut to a junk status.
European Union leaders are due to meet on Oct. 18-19.
YEN STRENGTH LOSES STEAM
As currency market participants kept their eyes on equities,
a slight gain of 0.3 percent in Asian stocks outside Japan
suggested easing risk-aversion and underpinned
growth and risk sensitive currencies such as the Australian
The Aussie was steady against the yen at 80.40,
after rising to a high of 80.74 earlier. The euro also stood
nearly flat at at 101.28 yen off an earlier high of
The Aussie earlier came just a touch below its
highest since Oct. 2 of $1.0294 seen on Thursday.
The stability in the euro and riskier currencies capped the
dollar index, which is measured against a basket of six
Against the yen, the dollar was buoyed by a number of
factors, rising to a high of 78.54 yen. On Thursday, it
hit 77.94 yen, its lowest against the Japanese currency
since Oct. 1.
Data showing a sharp decline in initial U.S. jobless claims
last week, to the lowest level in more than four and a half
years, and news that Japanese wireless service provider Softbank
Corp may buy a majority stake in Sprint Nextel,
in a deal that could be worth at least 1 trillion yen ($12.74
billion helped support the dollar against the yen, traders said.
"The mood towards the yen switched completely overnight,
after the initial claims and Softbank news, which at least is
not a yen-buying factor," said Hiroshi Maeba, head of FX trading
Japan for UBS in Tokyo. He added that the potential Softbank
deal was so large that currency markets could be tapped for part
of the financing.
He expected the dollar/yen to trade near 78.50 within a
broader range of 78.30-78.60, with support around 78.25 yen and
the base of the daily Ichimoku cloud around 78.70 serving as
Traders also noted wariness about Japan's resolve to prevent
the yen's appreciation, with Japanese Economics Minister Seiji
Maehara saying he will discuss the pain a strong yen is
inflicting on Japanese exports when he meets U.S. Federal
Reserve Chairman Ben Bernanke and ECB President Mario Draghi
later on Friday.