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FOREX-Dollar slips vs yen but stands tall against commodity currencies

Published 05/04/2016, 12:32 pm
Updated 05/04/2016, 12:40 pm
© Reuters.  FOREX-Dollar slips vs yen but stands tall against commodity currencies
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* Dollar languishes vs yen, euro

* Commodity currencies broadly underperform, Aussie eyes RBA (Updates throughout)

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 Australian, Canadian and New Zealand currencies, which all 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 0.5 percent at 110.815 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 $1.1400 EUR= , hovering within distance of a 5-1/2-month peak of $1.1438 scaled last week.

The dollar, on the other hand, performed well against the Aussie, which was hit as investors turned defensive ahead of a policy review later in the day by the Reserve Bank of Australia (RBA), which is under growing pressure to temper the currency's strength. AU/INT

"Interest will be on the RBA's comments regarding the latest Australian dollar appreciation," said Joseph Capurso, senior currency strategist at Commonwealth Bank.

The 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. addition to the Aussie, other 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$1.3100 CAD=D4 per dollar after losing about 0.6 percent overnight. The New Zealand dollar was down 0.3 percent at $0.6814 NZD=D4 , extending an overnight fall of 1 percent.

The dollar index .DXY was last at 94.502, 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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