* Yen gets reprieve after recent selloff
* Traders cite stop-loss selling in dollar/yen, cross/yen
* Dollar/yen on track for first weekly drop since late Oct
By Masayuki Kitano
SINGAPORE, Jan 3 The yen rose in a
short-covering rally on Friday, getting some respite in the wake
of its recent slide to five-year lows versus the dollar and the
The yen's climb built up steam due to stop-loss selling in
the dollar and the euro versus the Japanese currency, traders
The dollar fell 0.5 percent to 104.26 yen, down more
than a full yen from a five-year high of 105.45 yen set on
Thursday. Traders said there had been some stop-loss dollar
offers at levels between 104.50 to 104.30 yen.
"The dollar/yen run-up has been quite fast, quite rapid. So
a bit of pullback ... is kind of normal for dollar/yen," said
Sim Moh Siong, FX strategist for Bank of Singapore.
For the week, the dollar was down 0.9 percent against the
yen, putting the greenback on track for its first weekly loss
versus the yen since late October.
Prior to this week the dollar had posted weekly gains
against the yen in nine consecutive weeks, a period when
currency speculators ramped up bets for the yen to weaken
Data on currency futures positions on the Chicago Mercantile
Exchange shows that currency speculators had increased their net
short position in the yen to 143,822 contracts in the week ended
Dec. 24, the largest since July 2007 and up from 62,395
contracts in late October.
How the dollar performs versus the yen next week after
Japanese market players return from their New Year's holidays
will be key for the near-term outlook, said a U.S.-based
"I take all this movement with a grain of salt... Have to
see what happens when Tokyo gets back in," he said.
"Next week we will know if uptrend is still intact or if we
are in a real reversal," the trader added.
Some analysts said falls in equity markets the previous day
may have acted as an initial catalyst for traders to cover their
short positions in the yen.
"I think if there's anything concrete, it's probably the
equity market weakness, potentially higher risk aversion, and
the pull-back in U.S. yields that to me are probably the two
triggers for the move in dollar/yen," said Mitul Kotecha, head
of global foreign exchange strategy for Credit Agricole in Hong
U.S. stock markets had fallen on Thursday as investors
booked profits in the wake of the S&P 500's best yearly advance
since 1997, while the 10-year U.S. Treasury yield
dipped back to levels below 3 percent.
The euro shed 0.6 percent to 142.47 yen,
extending its losses in the wake of its 1.2 percent slide the
previous day. The single currency pulled away from a five-year
peak of 145.67 yen set last Friday.
Against the dollar, the euro held steady at about $1.3664
, staying within sight of a two-week low near $1.3630 set
The euro has retreated in the wake of its rise to a two-year
high of $1.3894 last Friday.
The euro had risen in thin trading conditions in late
December, supported by factors such as euro zone banks
repatriating funds to shore up their capital bases before an
asset quality review by the European Central Bank.