* Japan exporters tiptoe into market to sell dollar
* Market looking to comments by U.S. Treasury's Geithner
* Japan PM Kan says will take decisive steps as needed
By Hideyuki Sano
TOKYO, Sept 16 (Reuters) - The yen crept higher on Thursday
but the market was on the alert for more intervention by Japanese
authorities after a massive amount of yen-selling the previous
day knocked the yen off a 15-year high against the dollar.
Some traders see chances of another round of intervention
increasing if the dollar slips back below 85 yen, after Japan
sold an estimated 2 trillion yen ($23 billion) on Wednesday, a
record for a single day, in a move seen as aimed at showing its
resolve to curb yen strength.
The market is also watching what U.S. Treasury Secretary Tim
Geithner might say later in the day about Japan's intervention,
which boosted the dollar by more than 3 percent, its biggest
daily gain against the yen in almost two years.
"Intervention will likely continue for a while, perhaps for
quite a long time, because once authorities start it, it's not
something that they can stop easily," said a trader at a major
Japanese bank.
Prime Minister Naoto Kan reiterated on Thursday that Japan
would take decisive steps on yen rises if needed, Jiji news
agency reported.
The dollar fell about 0.5 percent to 85.30 yen <JPY=> as some
Japanese exporters took advantage of its jump to sell dollars
earned overseas, pushing it off Wednesday's high of 85.78 yen hit
on electronic trading platform EBS.
The dollar sprang up from a 15-year low of 82.87 yen on
Wednesday after Japanese authorities, concerned that the yen's
rise will hurt the economy by squeezing exporters' profits,
stepped into the market for the first time in six years.
Traders have said Japanese exporters wanted to sell the
dollar above 85 yen before their half-year book-closings at the
end of September.
"Looking at the dollar's surge yesterday, some Japanese
exporters may want to wait a bit more before they sell the
dollar," said Teppei Ino, an analyst at Bank of Mitsubishi-Tokyo
UFJ.
POSITIONS BUILDING UP
Institutional investors may hold back from selling the dollar
against the yen in anticipation of a further rebound in the
dollar, said Kimihiko Tomita, the head of forex at State Street
Global Markets.
"According to our data, institutional investors have started
to close their yen-short/dollar-long positions since mid-August,
which I think helped to accelerate the yen's rise. Intervention
could make those investors think twice about closing their
positions," he said.
Speculators who have bought the yen heavily may be forced to
close their positions if the yen continues to fall.
Data from the U.S. Commodity Futures Trading Commission
showed last week that speculators have a big net yen long
position of 52,183 contracts. []
"My hunch is that not all of these positions have been
unwound yet. So there could be more short-squeezing if the dollar
rallies," said a trader at a Japanese bank.
Yet the dollar faces many resistance levels on the upside as
well, starting with its 20-day upper Bollinger Band around 85.80.
More resistance is seen around 86.30, where the bottom of an
Ichimoku cloud sits on Thursday.
Some traders are already building up long dollar/yen
positions as they speculate that more yen-selling intervention
may be in the offing, which suggests profit-taking could emerge
at any time.
The market will be looking to Geithner's testimony to the
Senate Banking Committee at 1400 GMT as Japan's intervention
could have complicated his efforts to persuade China to let the
yuan appreciate. []
Any criticism by Geithner of Japan's intervention could spark
speculation that Japan may scale back its activity, dealers said.
On Wednesday, U.S. lawmaker Sander Levin, who chairs the U.S.
congressional committee examining China's currency policy,
described Japan's intervention as "deeply disturbing".
[]
Geithner will tell lawmakers in prepared testimony that
China's yuan currency has risen too slowly and he is examining
what tools may be needed to persuade Beijing to move faster.
[]
The euro traded at 110.76 yen <EURJPY=R>, now down about 0.7
percent on the day and off a one-month high of 111.63 yen struck
on Wednesday.
Elsewhere, the New Zealand dollar <NZD=D4> slipped half a
U.S. cent to around $0.7260 after the country's central bank
signalled that interest rates would likely not rise as far or
fast as many had expected.
The head of the Reserve Bank of New Zealand (RBNZ), Alan
Bollard, said the kiwi's strength was not justified by the
country's fundamentals, pushing the kiwi to five-month low
against the Australian dollar <AUDNZD=R>.
(Additional reporting by Masayuki Kitano and Aiko Hayashi;
Editing by Michael Watson)
