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FOREX-Dollar slips vs yen after rally on jobs news

Published 12/06/2009, 07:58 PM
Updated 12/06/2009, 08:00 PM

* Profit-taking hits dollar after rally on jobs data

* Japanese exporter selling seen weighing on dollar

By Rika Otsuka

TOKYO, Dec 7 (Reuters) - The dollar slipped against the yen on Monday as traders pocketed profits, slipping from a one-month peak hit late last week when a surprisingly low number of U.S. job losses boosted hopes for an economic recovery.

Japanese exporters were expected to sell the dollar above the psychologically key 90 yen level, weighing on the U.S. currency in the near term, traders said.

Even so, traders said the dollar is likely to stay buoyant against other major currencies after employment data stoked speculation the Federal Reserve may consider raising interest rates from record lows sooner than previously thought.

Friday's figures showed the United States shed 11,000 jobs in November, much less than market forecasts for losses of 130,000..

Supported by such rate talk, the dollar posted its best performance against a basket of currencies in nearly a year on Friday. It soared 2.6 percent versus the yen, which has been under pressure as the Bank of Japan eased monetary policy last week to tackle deflation.

"The market's focal point has clearly shifted to U.S. rate speculation," said a senior forex trader at a European bank. "The Fed's exit strategy will likely dominate the market until the next jobs data is out, lending the greenback support."

The dollar index, a measure of its value against six other major currencies, fell 0.4 percent to 75.610. It jumped 1.7 percent on Friday, its biggest one-day jump since mid-December last year.

The dollar fell 0.6 percent from late Friday U.S. trade to 90.03 yen, off a one-month high of 90.78 yen hit after the jobs data. It remains well above a 14-year trough of 84.82 yen hit in late November on trading platform EBS.

Given growing speculation about higher U.S. interest rates, the dollar is seen likely to extend its rally. After its rise above 90 yen, the next key resistance is near the October peak of 92.50 yen, traders said.

The euro edged up 0.2 percent to $1.4885. (Editing by Michael Watson)

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