FOREX-Dollar nears 15-yr low as yen gains broadly

Published 10/28/2010, 10:40 PM
Updated 10/28/2010, 10:44 PM

* Yen gains as month-end flows, hedge funds help

* Dollar slips back towards 80.41 yen 15-year low

* Main focus still on FOMC and likely QE next week

TOKYO, Oct 29 (Reuters) - The dollar fell towards a 15-year low as the yen rose broadly on Friday and pushed down the euro and higher-yielders, with trade made choppy by month-end business but still in ranges ahead of a Federal Reserve decision on easing.

The euro fell 0.7 percent and the Australian dollar 0.6 percent against the yen, and the European currency triggered automatic sell orders as it headed down to 112.00 yen, with more sell stops expected below that threshold.

One dealer said yen demand at Tokyo's 0100 GMT fixing as well as talk of dollar selling by overseas hedge funds who had bought the pair the day before were helping push the Japanese currency nearer to Monday's 15-year peak of 80.41 yen per dollar.

But the major currencies were broadly in the ranges that have confined them in the past few weeks as investors wait to see if the Fed says next week that it will resume quantitative easing as many expect, and if so, in what size and over what time horizon.

"Overall the moves seem to be of the position unwinding variety," said a trader for a Japanese brokerage house.

Japanese shares also fell, with the benchmark Nikkei average down 1.7 percent, making some speculate it could temper the dollar's fall as the market might become cautious of Japanese yen-selling intervention.

A falling share market is seen as one of the conditions which could prod Japanese authorities to intervene, after they did so in September to counter a push higher in the yen.

There was speculation, however, that there might be stop-loss sell orders below the 80.41 yen level, where a break would heighten chances of an eventual test of the dollar's postwar record low of 79.75 yen.

The dollar fell 0.6 percent to 80.56 yen but edged up against the euro. The euro was 0.2 percent lower at $1.3902, testing support in that region, and was 0.7 percent down at 112.05 yen.

The Australian dollar fell 0.6 percent to 78.72 yen but was steady at $0.9773.

The dollar index, which tracks the greenback's performance against six major currencies, was steady at 77.333 after falling 1.1 percent on Thursday, its biggest one-day percentage fall for a week. (Reporting by Masayuki Kitano, Hideyuki Sano and Charlotte Cooper; Editing by Michael Watson)

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