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FOREX-Dollar recoups some losses vs yen on Japan intervention fears

Published 12/04/2016, 12:44 am
Updated 12/04/2016, 06:40 am
© Reuters.  FOREX-Dollar recoups some losses vs yen on Japan intervention fears
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(Updates prices, adds comment, changes byline, previous dateline LONDON)

* Japanese official warns again on "one-sided" moves

* Market still sceptical of threat of intervention in near-term

By Gertrude Chavez-Dreyfuss

NEW YORK, April 11 (Reuters) - The dollar pared losses after hitting 17-month lows against the yen on Monday, as Japan again warned that it could intervene in the market to weaken the Japanese currency.

Gains in global stock markets and a rebound in oil prices have also diminished the allure of safe-haven currencies such as the yen, which fell for the first time versus the dollar in seven days.

But it was the warning by Chief Cabinet Secretary Yoshihide Suga on the yen's recent gains which spurred traders to unwind some one-sided trades on the dollar-yen.

Suga said overnight that the Group of 20's agreement to avoid competitive devaluations did not mean Japan cannot intervene against currency moves, repeating language which has flagged intervention in the past. the comments sent the yen lower overnight, the overall nervousness in global markets continues to keep the Japanese currency's safe-haven allure in high demand," said Omer Esiner, chief market strategist at Commonwealth Foreign Exchange in Washington.

In mid-morning trading, the dollar was little changed at 108.00 yen JPY= . Earlier the dollar fell to a 107.64 yen, the lowest since October 2014. The greenback has fallen three straight weeks against the Japanese currency.

Suga told a news conference the Japanese government was closely monitoring the currency market with a sense of urgency, calling the yen moves one-sided and speculative. the running logic among analysts is that Tokyo cannot easily intervene ahead of G20 meetings in Washington this week and a round of G7 summits it is hosting in May.

The yen also fell against the euro, which rose 0.4 percent to 123.69 yen EURJPY= . The euro also rose 0.3 percent against the dollar to $1.1438 EUR= .

A number of U.S. Federal Reserve policymakers are scheduled to speak this week, but analysts held out little hope that their comments would significantly revive expectations for interest rate rises this year.

Fed Chair Janet Yellen's caution on policy has cooled any thoughts of a rise before mid-year even as a number of her colleagues have sounded more bullish.

The dollar index was down 0.5 percent at 93.819 .DXY .

"The bottom line is that an April FOMC (Federal Open Market Committee) rate hike looks unlikely," said Thierry Albert Wizman, global interest rates and currencies strategist, at Macquarie Group Limited in New York.

Still, he added that the FOMC believes that gradual increases in the federal funds rate over time are still appropriate.

"So June is still live," Wizman said. (Editing by Ed Osmond and Richard Chang)

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