* Dollar/yen supported by Friday’s rise in U.S. yields
* Near-term upside for dollar/yen seen limited
* Euro sags, inches away from Friday’s 2-week high
* Profit-taking cited in euro/yen
By Masayuki Kitano
SINGAPORE, Oct 8 (Reuters) – The dollar eased against the
yen on Monday, backing off from a two-week high hit late last
week after a surprise drop in the U.S. unemployment rate soothed
investor concerns about the U.S. economy’s outlook.
The dollar fell 0.1 percent to 78.58 yen, down from
Friday’s high of 78.88 yen hit on trading platform EBS, the U.S.
currency’s strongest level since Sept. 19.
The U.S. unemployment rate dropped to 7.8 percent in
September, its lowest level since January 2009, the U.S. Labor
Department said on Friday.
The data triggered a rise in the 10-year U.S. Treasury yield
to its highest level in about two weeks and helped
the dollar rise versus the yen on Friday, market players said.
Still, a substantial move higher in U.S. bond yields from
here seems unlikely, and any gains in the dollar versus the yen
will probably be limited in the near term, said Mitul Kotecha,
head of global foreign exchange strategy for Credit Agricole in
Hong Kong.
“The impression I get is just above 79 there’s a lot of
sellers out there. The impression we get is a lot of (Japanese)
exporters will be in around that level,” he said.
Friday’s data was unlikely to be enough to convince market
participants that the U.S. jobs market is headed toward a
strengthening recovery, Kotecha added.
According to a business sentiment survey published by the
Bank of Japan last week, the average dollar/yen exchange rate
assumption that major Japanese manufacturers are using in their
business plans for the six months to March 2013 is 78.97 yen.
That suggests that Japanese exporters may want to sell the
dollar if it rises beyond that threshold, although they are
unlikely to be active on Monday, with Japanese markets closed
for a public holiday.
EURO/YEN PROFIT-TAKING
The euro fell 0.4 percent to $1.2986, pulling away
from Friday’s two-week high of $1.3072. Against the yen, the
euro slid 0.5 percent to 102.04 yen.
There was some talk that the euro fell due to profit-taking
against the yen. Even accounting for Monday’s move, the euro is
still up around 2.4 percent versus the yen compared to a trough
hit in late September.
In addition, a trader for a European Bank in Singapore said
the euro was weighed down by comments by German Finance Minister
Wolfgang Schaeuble on Sunday that Chancellor Angela Merkel’s
trip to Greece this week did not mean the debt-stricken country
would receive the next tranche of aid from its bailout.
Schaeuble added that Greece must fulfil its obligations for
aid to be paid out.
Besides developments in Greece, a focal point for the euro
has been when Spain might make a request for external aid.
Traders and analysts say the euro could get a boost if Spain
makes such a request as that would open the way for the European
Central Bank to buy Spanish debt to help bring down Madrid’s
borrowing costs.
The euro has climbed around 7.8 percent since hitting a
two-year low of $1.2042 in late July, bolstered by hopes for ECB
action to help quell the region’s sovereign debt crisis.
