* Euro rises on better-than-expected euro zone PMI
* Euro, dollar rise more than 1 percent against yen
* Post-BOJ drop in dollar/yen seen as temporary pullback
By Anooja Debnath
LONDON, Jan 24 The euro rose against the yen and
the dollar on Thursday after economic data from Germany and the
broader region indicated the worst of the euro zone debt crisis
may have passed.
The euro saw choppy trade after flash private sector
activity data highlighted the diverging fortunes of the bloc's
biggest economies, with weak performance in France balanced out
by numbers out of Germany showing its private sector expanded at
the fastest rate in a year.
Traders said that macro funds and asset managers were buying
the euro and that if data continued to show prospects for the
region were improving, the currency could rise further.
"The euro dipped on French numbers and was up on the German
data. On the whole there is positive sentiment for the euro,"
said Niels Christensen, FX strategist at Nordea.
"(It) seems capped at $1.34 for now, but it is fair to say
the euro is still firm across the board."
The common currency was up 0.1 percent against the dollar
at $1.3330, not far from $1.3404, an 11-month high hit on
Jan. 14 that is also acting as near-term resistance. Support was
cited at $1.3250, near lows touched on Jan. 11.
The euro was up 1.2 percent against the yen at
119.39 yen, inching towards a 20-month high of 120.73 yen hit on
Friday. Traders cited Asian central banks as main buyers of the
euro as they stepped up yen-selling.
The market will also be watching the influential German Ifo
survey due on Friday.
Some analysts said the announcement on the size of next
week's first repayments of cheap three-year loans taken by banks
from the European Central Bank just over a year ago could give
the euro a bit of a lift.
Banks took more than 1 trillion euros in the LTRO (long-term
refinancing operation) loans from the ECB. A Reuters poll showed
traders expected about 100 billion to be paid back next week.
Option traders reported strong demand for euro calls - bets
that the euro will rise - for expiry on Friday.
YEN SLIDE RESUMES
The yen fell across the board. The dollar was up 1.1
percent on Thursday, at 89.60 yen against the Japanese currency,
pulling away from a one-week low of 88.06 yen hit the previous
Traders said this move up in dollar/yen could face some
resistance ahead of stop-loss sell orders at 90 yen, but if it
does break through it could reach 90.25 yen, a 2-1/2 year high
hit on Monday.
Some Japanese politicians have said that the dollar's rise
to 100 yen would be welcome and help the economy. Those comments
along with position-squaring by speculators who bought the yen
in the past few session drove the Japanese unit lower.
"We see the yen begin to weaken again after comments that
the 100 level in dollar/yen is appropriate, so a lot of people
will start selling the yen and this will continue," said Adam
Myers senior FX strategist at Credit Agricole.
The yen's weakness became further entrenched after Japanese
Prime Minister Shinzo Abe said he expected the Bank of Japan to
achieve its 2 percent inflation goal as soon as possible.
"Investors are very quick to take advantage of any pullback
in dollar/yen and as soon as we get some yen negative news,
investors are happy to put on new short positions. The yen's
negative underlying trend firmly in place," Nordea's Christensen
The yen had rebounded earlier this week after the BOJ
disappointed some, who were expecting an immediate increase in
its asset-purchasing programme. This was despite the central
bank delivering its most aggressive policy easing yet to snap
the economy out of years of stagnation.