* Possible Fed tapering next week saps investors' risk
* Euro back near 2013 peak against dollar, 5-year peak vs.
* Aussie dollar slips despite upbeat domestic jobs data
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, Dec 12 The yen retreated toward
recent lows against the dollar and the euro in Asia on Thursday,
failing to capitalise on a small bounce as markets positioned
for a possible scaling back of the Federal Reserve's stimulus as
early as next week.
News that Congress has reached a bipartisan budget deal that
would end three years of impasse and fiscal instability was seen
clearing a potential hurdle for the Fed to taper its massive
Investors' appetite for risk waned on the growing
possibility of an earlier-than-expected stimulus reduction by
the Fed at its final policy meeting for 2013 next Tuesday and
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 1 percent, its sharpest one-day fall in
The selloff in risk assets initially prompted a squeeze on
short-yen positions which saw the euro slip as low as 141.20 yen
, pulling away from a five-year peak of 142.19 set on
Tuesday. That move proved short-lived as the euro bounced back
to 141.42 yen, up 0.2 percent on the day.
"The cross yen rates continue to march on higher," said Bart
Wakabayashi, head of forex at State Street Global Markets in
Tokyo, who said the impact on currencies of the U.S. budget
impasse resolution was muted.
The dollar fetched 102.58 yen, still below a
seven-month high of 103.40 yen touched on Tuesday but up about
0.2 on the day and off a session low of 102.39 yen. The dollar's
next test is seen at 103.50 yen, with talk of an options-related
"That was a pretty healthy move down, but we're back where
we are, so that level will be challenged again," Wakabayashi
The Australian dollar, often sold in times of heightened
risk aversion, fell about 0.2 percent against the greenback. It
last stood at $0.9023, despite data showing Australian
employment increased by 21,000 in November to handily beat
expectations as more full- and part-time positions were created.
In contrast, the Reserve Bank of New Zealand maintained its
hawkish stance on Thursday, signalling that interest rates could
start rising in the first half of next year.
That helped push the kiwi to $0.8275, up about 0.2
percent and well off its overnight low of $0.8201.
The dollar was steady at 79.883 but struggled to go
higher as the euro edged up against the U.S. unit. The common
currency has climbed nearly 4 percent since Nov. 11 and was up
about 0.1 percent at $1.3793, within easy reach of its
2013 peak of $1.3833 set back in October.
The latest run higher was fuelled by growing expectations
the European Central Bank will not be providing fresh stimulus
any time soon, although some analysts are starting to see little
value in the euro at current levels.
"We entered a short EUR/USD recommendation Wednesday,
targeting a move down to 1.32 with our stop set at 1.3975,"
analysts at BNP Paribas wrote in a note to clients.
"We think rate differentials are likely to move against the
euro once again in the near-term," they said, adding the
euro/dollar was trading rich according to their analysis.
There was little reaction to media reports that Stanley
Fischer, who led the Bank of Israel for eight years until he
stepped down in June, could become the Fed's next vice chair.
Sebastien Galy, strategist at Societe Generale, said Fischer
was a mentor of the current Fed Chairman, Ben Bernanke, and "is
very rationally a dove, when needed."
Such a view, if it becomes widespread, could potentially
weigh on the greenback.