(Corrects Japanese names in paragraphs 9 and 12)
By Hideyuki Sano
TOKYO Nov 25 Pressure on the yen is rising
after six months of relatively calm, range-bound trading, with
bears heartened by various technical signs as well as rising
global risk appetite.
The Japanese currency skidded to a six-month low versus the
dollar on Monday, sending the greenback above its July peak of
101.54 yen to 101.91 yen.
The sudden sharp move in the yen, which fell 1.8 percent
against the dollar over the past three sessions, took some
market players by surprise, even though many expected the yen to
weaken because of Japan's massive monetary stimulus.
One trigger for the renewed focus in the yen, analysts say,
was technical signals. Dollar/yen has clearly broken above its
triangle holding pattern since May late last week, prompting
onlookers to join the latest yen-selling frenzy.
"We can no longer say the dollar/yen is in a holding
pattern," said Teppei Ino, analyst at Bank of Tokyo-Mitsubishi
UFJ in Singapore.
Ino said the dollar is likely to target its May peak of
103.74 yen, a break of which is likely to open the way for a
test of 105.50 yen, a 61.8 percent retracement of the dollar's
2007-2011 decline from 124.17 to 75.31 yen.
In another positive signal, the dollar clearly broke above
Ichimoku cloud on monthly charts for the first time since 2007.
To be sure, the dollar may have risen too far, too fast in
the very near term, with its relative strength index reaching 70
percent, a level seen indicating an overbought market.
Yet many traders believe the 70 percent RSI threshold is far
from perfect, among them Osamu Takashima, chief FX strategist at
Citigroup Global Markets Japan: "Yes generally speaking it is
seen as a sign of over-heating. But what we should also bear in
mind is that it could also mean that a strong market momentum is
building up," he said.
U.S. positioning data published late last week showed
currency speculators increased net short positions in the
Japanese currency to the most in six years.
Speculators' net yen short positions reached 112,216
contracts, a level only reached in 2006-07 previously, when the
yen was under pressure because many speculators borrowed the yen
at low interest rates and convert it to higher yielding
currencies -- so-called yen carry-trades.
"I suspect the latest rise in speculators' positions
reflects their views that yen carry-trades will come back," said
Sho Aoyama, senior market analyst at Mizuho Securities.
Expectations of carry trades, which typically emerge when
investors' risk appetite is strong, are fuel led by recent rise
in world share prices, especially in the developed world.
Wall Street shares hit record highs last week
while Japanese shares are within sight of hitting 5-1/2 year
A sharp fall in oil prices on Monday after a nuclear deal
was struck with Iran is also seen helping the global economy,
further boosting investors' morale, market participants noted.
(Editing by Eric Meijer)