Yen strengthens on flows linked to year-end demand
* Dollar index dips 0.1 percent, holds above 4-wk low
* Euro rangebound ahead of Italy auction
By Nia Williams
LONDON, March 29 (Reuters) - The yen rose broadly on Thursday, boosted by demand linked to the end of Japan's financial year, although most market players said the dollar should reassert itself as long as upcoming U.S. data does not bear out a rise in concerns about growth.
A second straight day of losses in Chinese stockmarkets and a below-forecast increase in new orders for U.S. durable goods on Wednesday knocked some investors' appetite to take on risk, and contributed to demand for the safe haven yen.
The last day for spot trading in the business year to March 31 was on Wednesday but real-money flows from Tokyo kept major currencies under pressure against the yen, with exporters selling the dollar in large amounts, market players said.
The euro edged 0.2 percent higher against the dollar to $1.3336 ahead of an Italian debt auction. The shared currency remained rangebound despite expectations euro zone finance ministers will approve a bigger financial firewall to contain the region's debt crisis on Friday.
"There's definitely a lot of month-end and quarter-end rebalancing but the bigger story we are seeing is some bond buying and equity selling in the last 24 hours," said Geoff Kendrick, currency strategist at Nomura.
"But assuming U.S. economic numbers next week are okay we could see U.S. yields back up to the top of their recent range and that could be very dollar/yen supportive."
In general, U.S. data prior to the durable goods numbers had been heading in the right direction, but those latest figures, allied to a warning from Federal Reserve chief Ben Bernanke, have prompted nerves which most analysts say are unfounded.
Non-farm payrolls, one of the most closely watched sets of economic figures, are released next Friday. Before that U.S. initial jobless claims and a final reading of final quarter 2011 GDP were scheduled for 1230 GMT on Thursday.
The dollar index edged 0.1 percent lower to 79.048, holding above a four-week low of 78.77 hit earlier in the week after Bernanke kept the door open for more easing of monetary policy.
Against the yen the dollar hit a session low of 82.25 yen, triggering reported 'stop loss' automatic sell orders on a break of 82.35/40. But analysts said the dollar had so far held above key levels and expected buying of the yen to end, followed by further weakness for the Japanese currency in coming months.
"Despite the year-end deals going through and dovish comments from the Fed's Bernanke, we're seeing the dollar is resilient against the yen," said Sumino Kamei, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.
The euro also dipped against the yen, falling 0.4 percent to 109.90 yen.
ITALY AUCTION EYED
Italy will face the toughest of its three debt sales this week when it sells five- and 10-year bonds and launches a new floating rate note later in the session.
The auctions were expected to go smoothly but signs of poor demand could re-ignite concerns of contagion in the euro zone debt crisis and knock the shared currency.
Nomura's Kendrick said although market players were talking about the risk of an escalation in the debt crisis if investors lost confidence in Italy and Spain, yields were only gradually creeping higher. This meant the euro was likely to stay in its recent range between $1.30 and $1.35 for the short-term.
"In the medium-term I think we will go lower on the fact that U.S. growth is okay while European growth is not. It will become a slow grind lower with the periphery risks still in the background," Kendrick said.
Market players were also looking ahead to a meeting on Friday where euro zone ministers will discuss bolstering the region's rescue fund. Expectations were tempered by European Central Bank governing council member and Bundesbank chief Jens Weidmann who warned that raising the firewall around stricken euro zone members would only buy time.
Meanwhile, the growth-correlated Australian dollar pared losses to trade down 0.1 percent on the day at US$1.0385 after hitting a session low of US$1.0341 following falls on Chinese bourses.
* Dollar index dips 0.1 percent, holds above 4-wk low
* Euro rangebound ahead of Italy auction
By Nia Williams
LONDON, March 29 (Reuters) - The yen rose broadly on Thursday, boosted by demand linked to the end of Japan's financial year, although most market players said the dollar should reassert itself as long as upcoming U.S. data does not bear out a rise in concerns about growth.
A second straight day of losses in Chinese stockmarkets and a below-forecast increase in new orders for U.S. durable goods on Wednesday knocked some investors' appetite to take on risk, and contributed to demand for the safe haven yen.
The last day for spot trading in the business year to March 31 was on Wednesday but real-money flows from Tokyo kept major currencies under pressure against the yen, with exporters selling the dollar in large amounts, market players said.
The euro edged 0.2 percent higher against the dollar to $1.3336 ahead of an Italian debt auction. The shared currency remained rangebound despite expectations euro zone finance ministers will approve a bigger financial firewall to contain the region's debt crisis on Friday.
"There's definitely a lot of month-end and quarter-end rebalancing but the bigger story we are seeing is some bond buying and equity selling in the last 24 hours," said Geoff Kendrick, currency strategist at Nomura.
"But assuming U.S. economic numbers next week are okay we could see U.S. yields back up to the top of their recent range and that could be very dollar/yen supportive."
In general, U.S. data prior to the durable goods numbers had been heading in the right direction, but those latest figures, allied to a warning from Federal Reserve chief Ben Bernanke, have prompted nerves which most analysts say are unfounded.
Non-farm payrolls, one of the most closely watched sets of economic figures, are released next Friday. Before that U.S. initial jobless claims and a final reading of final quarter 2011 GDP were scheduled for 1230 GMT on Thursday.
The dollar index edged 0.1 percent lower to 79.048, holding above a four-week low of 78.77 hit earlier in the week after Bernanke kept the door open for more easing of monetary policy.
Against the yen the dollar hit a session low of 82.25 yen, triggering reported 'stop loss' automatic sell orders on a break of 82.35/40. But analysts said the dollar had so far held above key levels and expected buying of the yen to end, followed by further weakness for the Japanese currency in coming months.
"Despite the year-end deals going through and dovish comments from the Fed's Bernanke, we're seeing the dollar is resilient against the yen," said Sumino Kamei, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.
The euro also dipped against the yen, falling 0.4 percent to 109.90 yen.
ITALY AUCTION EYED
Italy will face the toughest of its three debt sales this week when it sells five- and 10-year bonds and launches a new floating rate note later in the session.
The auctions were expected to go smoothly but signs of poor demand could re-ignite concerns of contagion in the euro zone debt crisis and knock the shared currency.
Nomura's Kendrick said although market players were talking about the risk of an escalation in the debt crisis if investors lost confidence in Italy and Spain, yields were only gradually creeping higher. This meant the euro was likely to stay in its recent range between $1.30 and $1.35 for the short-term.
"In the medium-term I think we will go lower on the fact that U.S. growth is okay while European growth is not. It will become a slow grind lower with the periphery risks still in the background," Kendrick said.
Market players were also looking ahead to a meeting on Friday where euro zone ministers will discuss bolstering the region's rescue fund. Expectations were tempered by European Central Bank governing council member and Bundesbank chief Jens Weidmann who warned that raising the firewall around stricken euro zone members would only buy time.
Meanwhile, the growth-correlated Australian dollar pared losses to trade down 0.1 percent on the day at US$1.0385 after hitting a session low of US$1.0341 following falls on Chinese bourses.
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