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FOREX-Yen weakens as investor confidence rises

Published 05/26/2009, 09:21 PM
Updated 05/26/2009, 09:24 PM

* Yen soft as U.S. data boosts investor confidence

* Dollar gains vs yen, sterling hits 6-month high

* Aussie brushes highest in nearly 8 months vs dollar

By Charlotte Cooper

TOKYO, May 27 (Reuters) - The yen fell on Wednesday as an improvement in U.S. consumer confidence reinvigorated investor interest in betting on riskier assets, including currencies seen likely to benefit quickest from economic improvement.

Sterling climbed to a six-month high against the Japanese currency, while the Australian dollar tested its strongest levels in nearly eight months against the U.S. dollar.

The U.S. consumer confidence index rose to 54.9, its highest in eight months and stronger than forecasts for a reading of 42.0. The data boosted hopes of an economic rebound and helped lift U.S. stock markets.

"We're seeing most risk proxies firmer," said Su-Lin Ong, a senior economist at RBC Capital Markets in Sydney.

"It's not to suggest that there's an 'onward upwards' recovery in the U.S. and the globe but it is consistent with the idea that the worst is behind us."

The dollar rose 0.2 percent to 95.14 yen, after climbing as high as 95.37 yen on trading platform EBS. A trader at a major Japanese bank said it hit buy orders near 95.20/30.

The euro gained 0.2 percent to 133.05 yen while sterling, which has been on a steady uptrend against the Japanese currency since January, touched its strongest level since early November at 152.28 yen.

Data showed Japan's exports fell 39.1 percent in April from a year earlier, a slower pace than forecast or than in March, adding to growing signs the worst of the global slump in trade may be over.

Japan's trade balance logged a surplus of 69.0 billion yen ($728.6 million), compared with expectations for a 57.5 billion yen shortfall.

"It's another sign that the worst for Japanese exports is over," said Takeshi Minami, chief economist at Norinchukin Research Institute.

"But the global economy is still hurt, so a sharp rebound is unlikely. For Japanese companies, severe conditions will continue."

Bucking the trend was the New Zealand dollar, which was down 0.3 percent against the dollar and the yen.

Ong said news that dairy export giant Fonterra Co-operative Group, which generates more than 7 percent of the country's gross domestic product, expected to make a lower payout to farmers for the 2009/10 dairy season weighed on the kiwi.

New Zealand also unveils its annual budget on Thursday, with concern weighing on the currency of a possible ratings downgrade depending on what the budget delivers, Ong said.

The euro held steady at $1.3995, just below last week's four-month peak above $1.4050.

The dollar was steady as measured against a basket of six major currencies, although it was still within sight of a five-month low set on Friday. (Editing by Joseph Radford)

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