* Yen gains as BOJ signals Japan action on FX not imminent
* BOJ expands fixed rate fund supply scheme
* US consumer spending rises in July
(Updates prices, adds comment, changes byline, dateline,
previous LONDON)
By Wanfeng Zhou
NEW YORK, Aug 30 (Reuters) - The yen rose broadly on Monday
after the Bank of Japan's decision to expand a fund supply tool
disappointed investors who had looked for more aggressive
measures to curb the yen's strength.
The dollar fell below 85 yen and the euro lost about 1
percent against the Japanese currency after the BOJ beefed up
the supply of fixed-rate loans to banks to 30 trillion yen
($351 billion) from 20 trillion yen.
Investors saw the central bank's moves as a symbolic
gesture that will do little to halt the currency's climb,
putting the onus on the Japanese government to act if the yen
continues to rally. []
"An increase in the program by 10 trillion yen really
wasn't what the market was looking for," said Andrew Busch,
currency strategist at BMO Capital Markets in Chicago. "It
really leaves one to believe that their policy choices are
limited as far as the currency goes."
In early New York trading, the dollar fell 0.5 percent to
84.68 yen <JPY=>, down from the day's high above 85.90 yen hit
before the BOJ announced its policy decision. The dollar had
earlier hit a session low of 84.56 yen, according to Reuters
data, not far from its 15-year low of 83.58 yen set on
electronic trading platform EBS last week.
Adding to strength in the yen were comments from Bank of
Japan Governor Masaaki Shirakawa, who said after meeting Prime
Minister Naoto Kan that Kan had not made any requests on the
central bank's monetary policy. Shirakawa refused to comment on
recent currency moves.
Earlier in the day, Shirakawa said policy steps will not be
bound by moves in the yen and stocks and that the rise in the
yen was down to investor aversion to risk. []
The BOJ's move and the official comments encouraged
investors to add to long yen positions as the comments were
seen as an indication that FX intervention by Japan was not
imminent.
"People are once again putting on short dollar/yen
positions, having reduced their long exposure ahead of the
meeting," said Niels Christensen, currency strategist at Nordea
in Copenhagen.
A trader in London said that stop-loss orders to sell the
dollar under 84.90 yen helped accelerate the pair's slide.
LONG YEN POSITIONS INCREASE
The euro <EURJPY=R> fell roughly 1 percent to around 107.65
yen. Against the dollar, the euro lost 0.4 percent to $1.2707
<EUR=>.
Analysts expect the yen to rise further against the dollar
if expectations mount that the U.S. Federal Reserve will act to
spur growth down the road, moving more aggressively than the
BOJ.
Fed Chairman Ben Bernanke said on Friday the economic
recovery has weakened more than expected and the Fed stands
ready to act if needed to spur slowing growth. []
Data from the Commodity Futures Trading Commission showed
investors increased long positions in the yen and the Swiss
franc in the week to Aug. 24 as worries about a slowing global
economy encouraged investors to seek perceived safe-haven
currencies. []
Japanese Prime Minister Kan said on Monday that ministers
would take economic steps using 920 billion yen ($10.8 billion)
in reserves from this fiscal year's budget. See
[]
"Japan is facing a rise in the yen, and there are concerns
about a slowdown in overseas economies," Kan told a meeting of
relevant ministers on the economic measures.
Aside from the yen, currency movements were limited in
European trade, with London markets closed for a holiday.
The dollar showed little reaction to U.S. data showing
consumer spending rose at the strongest pace in four months in
July. []
(Additional reporting by Jessica Mortimer in London; Editing
by Padraic Cassidy)
