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FOREX-Dollar edges up vs yen before US bank earnings

Published 04/13/2009, 12:10 AM
Updated 04/13/2009, 12:24 AM
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* Many overseas players away for Easter holiday

* Focus on how stocks fare as US bank results come in

TOKYO, April 13 (Reuters) - The dollar edged up against the yen in quiet trade on Monday with many overseas players still away for the Easter holiday and others waiting until the U.S. corporate earnings season gets into full swing.

U.S. banks including Goldman Sachs, JPMorgan and Citigroup are set to report first-quarter results this week, and traders are keen to see how stock markets react to these earnings reports.

But after a relaxation of industry accounting standards, analysts say it will be difficult to gauge losses from bad loans in areas like real estate and consumer credit.

"Market participants generally stayed on the sidelines before the U.S. bank earnings and they are waiting for stocks' moves following the results," said a dealer at a Japanese bank.

Last week, the dollar rose against the yen, buoyed by a rally in U.S. shares after positive earnings guidance from U.S. bank Wells Fargo.

"If U.S. earnings results show signs that the U.S. is pulling away from the worst of the economic downturn, risk appetite is expected to grow, putting pressure on the yen," said Yoshihisa Kanzaki, a currency dealer at Shinkin Central Bank.

Others said the currency market has priced in positive U.S. earnings figures, so downward pressure on the yen could be limited even if the results are better than expected, and that the market is more likely to swayed by negative surprises.

The dollar was trading around 100.37 yen compared with 100.22 yen in late Tokyo trading on Friday. The U.S. currency touched 101.45 yen last week, its highest in six months.

The euro was quoted at $1.3165, down from $1.3186 on Friday when it also slipped to $1.3090, a level not seen since mid-March.

Against the yen, the euro was at 132.16 yen, down from 132.24 yen. It climbed to 137.42 yen last week, its highest point in six months.

The Australian dollar rose above 73.00 yen, the highest since October, before falling back to 72.51 yen.

Retail investors had likely picked up the higher yielding Aussie on expectations Japanese stocks would open higher, with thin trade later exaggerating price swings, dealers said.

Australia last week slashed its key cash rate by 0.25 basis points to 3.0 percent, less than some had expected.

Tokyo's Nikkei stock average edged down 0.1 percent after moving in and out of positive territory.

Market players were also looking to developments in China after a report that the country was considering more stimulus steps.

China is planning a new economic stimulus package targeted at boosting consumption, the China Securities Journal reported on Monday, citing a senior official of the State Information Center, which is affiliated with the country's top planning agency.

If China expands its economic measures, it would help increase investor risk tolerance as a strong economic recovery in China would help the global economy, traders said.

The U.S. Treasury Department is directing General Motors to lay the ground work for a bankruptcy filing by June 1, even though the automaker has publicly stated it could reorganise outside of court, the New York Times reported on Sunday.

The immediate impact of the GM report on the currency market was limited but players will be eyeing how U.S. financial markets react to it, dealers said.

The market will also be watching a slew of U.S. economic data, including housing and labour market figures, as well as Chinese gross domestic product data for the first quarter due this week. (Reporting by Kaori Kaneko; Editing by Chris Gallagher)

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