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FOREX-Dollar slips vs yen, Aussie edges up after RBA stands pat on rates

Published 05/04/2016, 02:59 pm
Updated 05/04/2016, 03:10 pm
© Reuters. FOREX-Dollar slips vs yen, Aussie edges up after RBA stands pat on rates
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* Dollar languishes vs yen, euro

* RBA leaves rates unchanged at 2 pct, Aussie pares losses

* Other commodity currencies on defensive (Includes Aussie reaction to RBA rates decision)

By Shinichi Saoshiro and Ian Chua

TOKYO/SYDNEY, April 5 (Reuters) - The dollar nursed losses against the yen and euro on Tuesday, but was firmer versus the Canadian and New Zealand currencies, which succumbed to weakness in commodity prices.

The greenback has been on the defensive as views that the U.S. central bank is in no hurry to tighten monetary policy have held sway ever since Federal Reserve Chair Janet Yellen last week expressed caution towards hiking interest rates.

The dollar came under further pressure against the safe-haven yen as equities and crude oil prices fell.

Perceptions that the Bank of Japan would not immediately ease monetary policy, which in theory would curb yen strength, further favoured the Japanese currency.

The dollar was down 0.4 percent at 110.87 yen JPY= . A slide below 110.67 yen would take the currency to its lowest since October 2014.

"Dollar/yen has been weakening despite a firm U.S. economy and a weak Japanese economy. For the dollar to rebound, the decline in crude oil and U.S. debt yields have to halt and Japanese authorities would need to clarify their stance on further monetary easing," said Masafumi Yamamoto, chief FX strategist at Mizuho Securities in Tokyo.

The euro was up 0.1 percent at $1.1399 EUR= , hovering within distance of a 5-1/2-month peak of $1.1438 scaled last week.

The Australian dollar nudged up 0.3 percent to $0.7623 AUD=D4 from an intraday low of $0.7568 after the Reserve Bank of Australia left its cash rate unchanged at a record low 2 percent as widely expected.

The Aussie drew a bit of relief as the RBA resisted talking down the currency's recent strength as some had feared. Aussie surged more than 7 percent last month - its biggest monthly gain in over four years - to a high not seen since mid-2015. It has since retreated below $0.7600 AUD=D4 , from the high of $0.7723.

The Aussie's rally in part reflected a broadly declining greenback after Fed Chair Yellen's cautious statements last week.

Fed funds futures 0#FF: now have barely one rate hike priced in for this year. Unsurprisingly, the dollar has struggled against that backdrop.

Yet Boston Fed President Eric Rosengren on Monday warned that the interest rate futures market could be "too pessimistic", noting external risks to the U.S. economy seemed to be abating. commodity-linked dollars were also on the defensive with crude oil prices touching one-month lows as investors doubted that producing countries will freeze output to rein in a worldwide glut.

The Canadian dollar was steady at C$1.3084 CAD=D4 per dollar after losing about 0.6 percent overnight. The New Zealand dollar was down 0.3 percent at $0.6813 NZD=D4 , extending an overnight fall of 1 percent.

The dollar index .DXY was last at 94.545, back near a 5-1/2 month trough of 94.319 set on Thursday. (Editing by Shri Navaratnam and Sam Holmes)

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