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FOREX-Yen up as recovery trades blunted by US consumer data

Published 08/16/2009, 11:39 PM
Updated 08/16/2009, 11:42 PM

* Yen extends gains, Japanese exporters sell dollars

* Euro, sterling, Aussie all fall vs yen

* Profit-taking as stocks fall, nerves about recovery

By Charlotte Cooper

TOKYO, Aug 17 (Reuters) - The yen rose on Monday, hitting its highest in more than two weeks against the euro, as weak U.S. consumer morale clouded the outlook for a quick global recovery and spurred profit-taking in commodity-linked currencies.

The Australian and New Zealand dollars shed about 1 percent against the Japanese currency and the U.S. dollar, extending a fall which began on Friday and saw them stumble from their latest 2009 highs against the greenback.

Both currencies have been popular with investors betting they will be among the first to benefit from economic recovery and they have rallied in tandem with stock and commodity markets.

But Asian share markets were down 1-2 percent on Monday on concern about the U.S. economic turnaround. Consumer confidence fell in August for the second straight month, eclipsing reports that showed industrial output gained for the first time in nine months and inflation was muted..

"Weak data is no longer treated as a harbinger of an economic apocalypse, but as an indication that the forthcoming period of growth is likely to be frustratingly tepid relative to the rich valuations of risk-sensitive asset markets," said David Watt, senior currency strategist at RBC Capital Markets.

The dollar also fell against the yen but its losses were mild after a half-yen fall on Friday, and it was up on the day against the euro.

The greenback dropped 0.3 percent from late New York levels to 94.60 yen, close to its lowest for the month but still within a broad range of 91.70-98.00 seen since mid-June.

Traders said selling by Japanese exporters and by Japanese securities houses had weighed it down, while speculation about repatriation of receipts from U.S. Treasury coupons and redemptions also contributed to its fall.

Japan's economy grew for the first time in five quarters in the April-June period, expanding 0.9 percent and ending its longest recession in decades on the back of exports and government stimulus spending.

The data puts Japan in the first camp of G7 economies that have pulled out of recession, but analysts say the road to sustainable recovery is long. Traders said the data was positive but in line with expectations.

Dealers said the euro fell against the yen after hitting stop loss sell orders at 134.00 yen. It was down 0.7 percent at Y133.80.

"Euro/yen is still range-trading. In the short term I think there will be some selling pressure but in the medium term its still in a range," a senior trader a big European bank said.

The euro shed 0.4 percent to $1.4148, retreating further from this month's 2009 peak at $1.4448.

The Australian dollar was well below an 11-month high of $0.8479 struck on Friday, trading at $0.8230, and was on the defensive at 77.76 yen, down 1 percent.

It was also underperforming its New Zealand counterpart, striking its lowest in four months at NZ$1.2232, according to Reuters data.

The kiwi dollar fell 1 percent to $0.6700 and 63.28 yen. (Additional reporting by Anirban Nag in Sydney and Satomi Noguchi in Tokyo; Editing by Joseph Radford)

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