* Dollar and yen down across board
* Aussie hits 7-month high vs US dollar, yen
* Risk appetite buoyant after improving economic data
* Tokyo and London holidays thin volume
By Charlotte Cooper
TOKYO, May 4 (Reuters) - The yen and the dollar fell on
Monday, hitting seven-month lows against the Australian dollar
as investor confidence about the global economy encouraged
buying of commodity-related currencies.
With Tokyo markets shut until Thursday for the Golden Week
holiday and London on a one-day holiday, trading was lighter
than normal but did not stop sterling and the New Zealand
dollar from touching two-week highs against the yen.
Analysts said the gain in riskier currencies was driven by
a confluence of improving U.S. economic indicators, signs that
the new flu strain outbreak appeared less severe than feared
and rising stock markets.
The S&P futures rose 0.3 percent, indicating a firm start
on Wall Street later and Asian stocks rose to a seven-month
high.
Reports on Friday showed U.S. consumers felt more confident
about the economy in April while a key gauge of manufacturing
suggested it was gradually emerging from a deep slump.
[]
To add to the picture, a survey of manufacturing in China
provided evidence that fiscal and monetary stimulus is reviving
its economy. []
"All these factors are helping risk appetite. The dollar
and yen seem to be coming under some pressure and equities are
firming," said Mitul Kotecha, global head of foreign exchange
strategy at Calyon in Hong Kong.
The Aussie jumped to $0.7390 <AUD=D4>, its highest in seven
months, and struck 73.54 yen <AUDJPY=R>, its strongest showing
since mid-October. It later pared its gains to stand 0.7
percent up on the day at $0.7360 and 73.17 yen.
Soft Australian data, including a steep drop in house
prices and adverts for jobs, did little to dent its fortunes,
although analysts said the numbers added somewhat to the risk
of a surprise rate cut from the Reserve Bank of Australia on
Tuesday. []
Analysts say the yen is being used as a funding currency
for investors to ride rising trends in other currencies and
take positions in commodity currencies expected to benefit as
the outlook for the global economy improves.
The New Zealand dollar advanced 0.5 percent to $0.5737
<NZD=D4> and gained 0.3 percent to 56.96 yen <NZDJPY=R>, while
the Canadian dollar <CAD=D4> touched a fresh four-month high
against the U.S. dollar.
While the greenback lost ground broadly, it gained 0.3
percent to 99.44 yen <JPY=>, edging closer to the 100 yen level
which it broke in early April to set a six-month high of 101.45
yen. But it failed to sustain the April move for long.
"There's a view there's a lot of stop losses above there
(100.00) and if we see dollar/yen 100 being broken then you
could see a swift move higher to recent highs," Kotecha said.
The euro rose 0.3 percent to $1.3311 <EUR=> and 0.7 percent
to 132.36 yen <EURJPY=R>, although analysts said the market was
wary ahead of a European Central Bank meeting on Thursday when
it is expected to cut rates by 25 basis points to 1 percent.
As well as the rate cut, the market is looking for what
steps it might take in following central banks like the U.S.
Federal Reserve to adopt unconventional policy measures, such
as direct asset purchases, to stimulate growth.
Investors will also await the findings of the U.S. banks'
stress tests this week and the U.S. employment report on
Friday, which is expected to show 620,000 jobs were lost in
April, less than 663,000 lost in March.
Analysts warned the stress tests and jobs numbers held
risks for the relatively bullish investor sentiment, but Greg
Gibbs, currency strategist at the Royal Bank of Scotland, said
that confidence appeared to have gained positive momentum.
"Credit default swap, emerging market credit and implied
volatility indices have fallen to their lowest levels since
October. This resiliency in investor confidence suggests the
Aussie and the kiwi will rally further in the week or so,"
Gibbs said.
(Additional reporting by Anirban Nag and Wayne Cole in Sydney)
