* Dollar/yen jumps above 85 yen then retreats
* Traders cite intervention talk but no confirmation
* Euro rises on IFO, resilient to sovereign debt problems
(updates prices)
By Anirban Nag
LONDON, Sept 24 (Reuters) - The dollar spiked above 85.00
yen on Friday on talk of intervention by Japanese authorities
keen to stem the yen's recent gains, but quickly retreated as
doubts emerged about whether they had taken action.
That left investors nervous about more intervention and,
with risk aversion hitting markets, traders said the Bank of
Japan's task of weakening the yen was becoming even tougher.
The dollar rose as high as 85.40 yen <JPY=> from about 84.55
before talk of intervention emerged, climbing more than one yen
from 84.34 yen. It later retreated to 84.26 yen, a one-week low
and down 0.1 percent for the day.
"The price action certainly suggested that the Japanese
intervened, but one can't be sure," said Kenneth Broux, markets
strategist at Lloyds TSB Financial Markets.
"With stock markets retreating and a general pullback in
risk appetite, the yen and the Swiss franc will be supported,
making the BoJ's job harder."
Japanese officials stayed silent on whether they had
intervened. Top currency diplomat Rintaro Tamaki declined to
comment, Jiji news agency reported, and the Bank of Japan and
the government also had no comment. [].
Japan intervened for the first time in six years last week
in repeated action that pushed the yen down from a 15-year high
of 82.87 per dollar and shunted it above 85.
The dollar stayed above 85.00 yen until the Federal Reserve
signalled this week that it might take more quantitative easing
steps, putting widespread selling pressure on the greenback and
casting doubt over how effective solo intervention can be.
"At these levels, one can expect the Japanese to intervene,"
said Lee Hardman, currency economist at BTM-UFJ. "Certainly the
stronger fundamentals support a stronger yen, but I guess the
Japanese authorities will be keen to draw a line in the sand."
UPWARD PRESSURE ON YEN AND EURO
The dollar's jump came after it had fallen to 84.26 yen on
Thursday, its lowest since Japan intervened last week, and
traders said major Japanese banks were bidding up the dollar.
"Rather than saying clearly whether they did or not, they
may be trying to make market players jittery," said one Japanese
brokerage trader in Tokyo, who thought Japan probably did
intervene on Friday.
"They are probably changing their methods, with the aim of
dampening dollar-selling interest," the trader said.
Some dealers speculated an apparent lack of complaint by
U.S. President Barack Obama about last week's intervention when
he met Japanese Prime Minister Naoto Kan late on Thursday was
seen as tacit approval by Washington of Japan's action.
Obama, who urged Chinese premier Wen Jiabao to take more
action on the yuan, did not mention currencies when he met Kan,
Kyodo news agency reported.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For cross/yen graphic
http://link.reuters.com/tuh34p
For graphic on intervention
http://link.reuters.com/qep63p
For Insider Link: http://link.reuters.com/syb35p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The dollar faced resistance at 85.66 yen, its 55-day moving
average, which has acted like trendline resistance since June.
Traders said there was options-related selling in dollar/yen
with option expiries at 85 yen later on Friday to drive trade.
Some traders said a rumour Bank of Japan Governor Masaaki
Shirakawa might resign also helped the dollar. The BOJ said
there was no truth to the rumour. []
The greenback has been under pressure in part due to
shrinking yield gaps between the dollar and the yen.
As the dollar weakened, the euro rose 0.5 percent to $1.3380
<EUR=>, helped by strong German IFO numbers and moving closer to
a five-month high of $1.3441 struck on Wednesday.
[].
Euro/yen <EURJPY=R> also gained 0.7 percent to 113.06 yen,
with the euro having jumped as high as 113.75 and proving
resilient to lingering euro zone sovereign debt problems.
The euro was also firmer against the Swiss franc <EURCHF=>,
rising 0.4 percent to 1.3168 francs, aided in part by talk that
Nestle may increase its stake in L'Oreal. That was later denied.
(Additional reporting by Tokyo Forex team)
