FOREX-Yen, dollar fall, Aussie scales 7-month highs
* Aussie hits 7-month high vs US dollar, yen
* Dollar and yen down across board
* Risk appetite buoyant after improving economic data
* Tokyo on holiday, volumes thinner than normal
TOKYO, May 4 (Reuters) - The yen and the dollar fell on Monday, hitting seven-month lows against the Australian dollar as investor confidence about the global economy encouraged buying of commodities and riskier currencies.
With Tokyo markets shut until Thursday for the Golden Week holiday and London on a one-day holiday, trading was lighter than normal but did not stop sterling and the New Zealand dollar from pushing to their highest in two weeks against the yen.
Analysts said the gain in riskier currencies was driven by a confluence of improving U.S. economic indicators, signs that the new flu strain outbreak appeared less severe than feared and rising stock markets. The S&P futures SPc1 rose 0.5 percent, indicating an upbeat start on Wall Street later.
Reports on Friday showed U.S. consumers felt more confident about the economy in April while a key gauge of manufacturing suggested the sector was gradually emerging out of a deep slump.
"All these factors are helping risk appetite. The dollar and yen seem to be coming under some pressure and equities are firming," said Mitul Kotecha, global head of foreign exchange strategy at Calyon in Hong Kong.
The U.S. dollar gained 0.2 percent to 99.37 yen JPY= from late U.S trading levels, edging closer to the 100 yen level which it broke in early April to set a six-month high of 101.45 yen. But it failed to sustain the April move for long.
"There's a view there's a lot of stop losses above there (100.00) and if we see dollar/yen 100 being broken then you could see a swift move higher to recent highs," Kotecha said.
The Aussie jumped to $0.7390 AUD=D4, its highest in seven months, and struck 73.54 yen AUDJPY=R, its strongest showing since mid-October.
Traders and analysts say the yen is once again being used as a funding currency for investors to ride rising trends in other currencies and take positions in commodity currencies expected to benefit as the outlook for the global economy improves.
The euro EUR= rose 0.5 percent to $1.3335 EUR= and 0.8 percent to 132.63 yen EURJPY=R, although analysts said the market was wary ahead of a European Central Bank meeting on Thursday.
Some believe policy-makers might follow the U.S. Federal Reserve's lead and deploy unconventional emergency measures such as direct asset purchases, to stimulate growth. Continued...
