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FOREX-Yen soft, dollar at 1-month high as risk appetite trickles back
September 3, 2013 / 6:06 AM / in 4 years

FOREX-Yen soft, dollar at 1-month high as risk appetite trickles back

* Yen falls to one-month lows vs U.S. dollar

* Syria less of a worry for now as military strike delayed

* Upbeat European, China PMI reports help lift sentiment

* Dollar index at one-month high amid Fed tapering expectations

* Aussie dollar jumps after RBA holds rates steady

By Hideyuki Sano and Ian Chua

TOKYO/SYDNEY, Sept 3 (Reuters) - The safe-haven yen stood near one-month lows against the dollar on Tuesday, having fallen broadly as fresh signs of a pickup in global manufacturing activity helped lift risk appetites.

The market had already begun to unwind much of last week’s safe-haven trades as worries about an imminent military strike against Syria eased after U.S. President Barack Obama decided to seek congressional approval.

The dollar rose as high as 99.705 yen, near its Aug. 2 peak of 99.955 yen, after having gained more than 1 percent on Monday.

In one positive technical sign, the dollar has broken above its triangle holding pattern since May, though traders said offers from Japanese exporters and option-related selling near 100 yen have blocked the currency’s advance for now.

“I expect the dollar to be supported amid expectations that the Federal Reserve will start tapering its quantitative easing,” said Kyosuke Suzuki, director of forex at Societe Generale in Tokyo.

Traders expect the Fed to start reducing its stimulus at its policy meeting on Sept. 17-18, unless U.S. payroll numbers due on Friday hugely disappoint.

Yet market players see choppy trading ahead as the market braces for uncertainty on many fronts, including who will succeed Fed chief Ben Bernanke, not to mention tensions surrounding Syria and debates in the U.S. Congress on how to deal with it.

The dollar also hit a one-month high against a basket of currencies, with the dollar index rising as high as 82.331, its highest level since Aug. 2.

The moves came amid a U.S. market holiday on Monday and following surveys that showed robust growth in European factories and a rebound in China manufacturing activity. The reports lifted prospects for broad-based global recovery on the back of a U.S. revival.

As the dollar held the upper hand, the euro stayed near a one-month low of $1.3173 hit last week despite encouraging PMI surveys in Europe. It last stood at $1.3181, little changed on the day and still flirting with the 38.2 percent retracement level of its July 9-Aug. 20 rally.

The Australian dollar popped higher after the Reserve Bank of Australia kept interest rates on hold as expected while staying mum on the policy outlook.

The currency briefly reclaimed 90 U.S. cents and last stood at 90.45 cents up 0.6 percent on the day, pushing further above a three-year trough around $0.8848 plumbed last month.

“This was the Reserve Bank really trying to avoid sending any message out. The statement is very short, it’s very similar to the previous one, it’s basically the Reserve Bank trying not to attract attention to itself ... It’s very much in a data-dependent mode,” said Brian Redican, senior economist at Macquarie Bank in Sydney.

Market players also kept an eye on emerging market currencies, some of which have been hit by worries that an end in the Fed’s stimulus could prompt investors to shift funds back to U.S. markets.

So far on Tuesday, the Indonesian rupiah and the Indian rupee were under pressure due to big current accounts deficits in those countries but most other Asian currencies were stable.

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