* Yen steady vs dollar, investors wary of more yen selling
* Euro at 1-month high vs dollar, yen after Spain auction
* Swiss franc weakens broadly after SNB meeting
(Adds comment, updates prices)
By Wanfeng Zhou
NEW YORK, Sept 16 (Reuters) - The yen edged higher against
the U.S. dollar on Thursday with the Bank of Japan staying out
of currency markets after their massive yen-selling operation
the previous day, but wariness about fresh selling capped
gains.
The euro rose to its highest in more than a month against
the dollar and the yen after strong demand at a Spanish bond
auction reinforced confidence in Europe.
Japan sold an estimated 1.8 trillion yen ($21.14 billion)
for dollars on Wednesday, a record for a single day, in a bid
to help its exporters and increase its money supply to counter
deflation. Japan's first currency intervention in six years
knocked the yen from a 15-year high versus the dollar, but the
yen's six month uptrend did not look to be convincingly broken.
"Things have been quiet on the intervention front so far
today. Clients are hesitant at this point to touch dollar/yen
in either direction," said Amelia Bourdeau, senior currency
strategist at UBS AG in Stamford, Connecticut.
"Investors need more information. They have to watch
dollar/yen for another week or two just to see the frequency
with which they come in to the market and the size (of
intervention)," she added.
Prime Minister Naoto Kan reiterated on Thursday Japan would
take decisive steps on yen strength, Jiji news agency reported,
while Bank of Japan Governor Masaaki Shirakawa said he expected
intervention would stabilize the forex market. []
In mid-morning trading, the dollar was down 0.1 percent
against the yen <JPY=>at 85.62 yen, but well up on 82.87 yen
hit on electronic trading platform EBS on Wednesday. Investors
said a fall under 85.00 may prompt Japan to re-enter the
market.
The dollar earlier hit a session high of 85.84 yen on
electronic trading platform EBS after stops were triggered at
85.80 yen. Traders said there were no signs of yen-selling by
Japanese authorities.
"There's no sign of the Bank of Japan this morning yet on
markets, but they were successful yesterday and we are
beginning to see some funds moving in the same direction,
unwinding long yen positions," said Greg Salvaggio, vice
president of trading at Tempus Consulting in Washington. He
added investors should look out for stops at 86.10 yen.
Analysts said the dollar's upside may be capped around
85.83 yen, where a trendline from the dollar's highs in May and
June falls, and 85.95 yen, the 55-day moving average.
Others said Japanese authorities may have a hard time
fighting the yen's strength, given narrow yield spreads between
Japanese and U.S. government bonds.
"It is almost inevitable that the Japanese authorities will
have to continue intervention heading into year end with
USD/JPY likely to remain under downward pressure as the U.S.
economy slows and the Fed moves towards renewed monetary
easing," said Lee Hardman, currency economist at The Bank kof
Tokyo-Mitsubishi UFJ in London. "From an operational
standpoint, there is still plenty of scope for further
intervention."
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For Breakingviews on Janan's yen intervention []
For dollar/yen correlations http://link.reuters.com/wyn43p
For PDF on the yen's rise http://r.reuters.com/zuz33p
For graphic on intervention http://link.reuters.com/wym42p
For Insider on yen http://link.reuters.com/rak63p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Market participants said dollar selling by some Japanese
exporters pushed the U.S. currency off Wednesday's high of
85.78 yen hit on electronic trading platform EBS. Traders have
said exporters want to sell the dollar above 85 yen before
their half-year book-closings at the end of September.
SPANISH BOND SALE
The euro <EUR=> rallied 0.7 percent to $1.3098 after rising
to $1.3117 according to Reuters data, its highest since Aug.
11, after auctions of 10- and 30-year Spanish government bonds
produced lower average yields than at a previous sale in June.
[]
"The Spanish bond auction went very well and that's removed
some of the debt risks attached to the euro," said Chris
Turner, head of fx strategy at ING.
Traders in London said the euro's initial rise after the
results took out stop-loss orders placed around $1.3047, the
61.8 percent retracement of its sell-off in August.
It rose as high as 112.40 yen <EURJPY=R>, also its highest
in about a month and adding to gains after dollar/yen
intervention drove it up roughly 3 percent on Wednesday.
The Swiss franc weakened broadly after the Swiss National
Bank kept interest rates unchanged as expected and said that it
expected a slowdown in economic growth due to strength in the
currency. []
The euro jumped 1.6 percent to 1.3291 francs <EURCHF=>, the
biggest daily rise since May 19. The U.S. dollar gained 0.9
percent to 1.0120 francs <CHF=>.
(Additional reporting by Vivianne Rodrigues, Nick Olivari,
Gertrude Chavez-Dreyfuss in New York and Neal Armstrong in
London)
(Editing by Theodore d'Afflisio)
