* Dollar nears 93.78 yen goal, yen sold broadly
* Euro holds near $1.3400, still vulnerable
* Aussie falls as data dampens rate hike bets
By Aiko Hayashi
TOKYO, March 31 (Reuters) - The dollar hit a three-month high
against the yen on Wednesday as the Japanese currency lost ground
broadly, while the Australian dollar tripped after retail sales
data dented expectations for an interest rate hike next week.
The euro held near $1.34 <EUR=>, remaining vulnerable above
10-month lows as a bout of short-covering appeared to have run
its course, with euro zone fiscal worries never far away.
The dollar climbed above 93.50 yen <JPY=> to its highest
since early January as short-term speculators unwound long yen
positions ahead of the long weekend in London and New York, and
sterling hit its highest in a month at 140.96 yen <GBPJPY=R>.
Traders said Japanese banks, life insurers and hedge funds
were buying dollar/yen as the greenback broke above the key 93
yen level, cancelling out Japanese exporters' dollar selling.
Dollar buying for Japan's new fiscal year starting Thursday
may have also helped push it higher, and the U.S. currency is
likely to head towards this year's peak of 93.78 yen hit in
January, they said.
"Dollar/yen may start the new quarter by falling once the
squaring of positions is done," said an FX manager for a Japanese
trust bank.
"But there is a risk that dollar/yen may keep its rising
momentum if it manages to end today's New York trading above 93
yen, which would make charts look attractive for tech-driven
players to chase the dollar higher."
The greenback has gained just 0.4 percent on the yen this
quarter, following a climb of 3.7 percent in the prior quarter.
This year's high of 93.78 is now a target after the dollar
broke above its 200-day moving average last week.
The dollar index <.DXY> edged up 0.1 percent to 81.564,
holding below a 10-month high of 82.240 set last week. It has
risen almost 5 percent this quarter as the euro has fallen, U.S.
yields have gone up and data has supported the view the Federal
Reserve will raise rates before the euro zone or Japan.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Insider daily forex comment http://link.reuters.com/nes85j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
RATE HIKE QUESTION MARK
The Aussie dollar fell 0.4 percent to $0.9154 <AUD=> on the
day after retail sales data came in lower than forecast, making
players question whether the Reserve Bank of Australia would
raise rates by 25 basis points to 4.25 percent next week as some
expect. []
Interbank futures edged up <0#YIB:> and the Australian dollar
fell from a two-month high near 85.60 yen set early in the day
before edging back up to 85.50 <AUDJPY=R> as the yen lost ground
generally.
The Aussie has gained about 2 percent on the dollar and the
yen so far this quarter, while the euro has lost about 6 percent
in both cases.
The single European currency gained 0.5 percent on the day to
125.03 yen <EURJPY=R>, holding near a two-month high at 125.47
yen hit on Tuesday, with support expected at about 124.20.
But it slipped below $1.3400 <EUR=> as the dollar
strengthened broadly.
Strategists say the signs of improvement in the U.S. economy
and continuing fiscal problems in the euro zone are likely to
keep the euro subdued in the near term against the greenback.
Greek plans to reopen a 20-year bond issue added to worries
about its funding needs, while news that Ireland would take a
bigger stake in the banking sector than planned added to the air
of uncertainty. [] []
"The peripheral (fiscal) story is not moving off the agenda
and financing concerns remain at the forefront," said Sue Trinh,
senior currency strategist at Royal Bank of Canada in Hong Kong.
"The euro remains a sell on rallies."
The market is waiting for U.S. nonfarm payrolls data on
Friday. Before that, however, the private sector ADP report for
March is due at 1215 GMT on Wednesday, with 40,000 jobs forecast
to have been created against a loss of 20,000 jobs in February.
Also due at 1400 GMT are factory orders for February.
(Additional reporting by Satomi Noguchi, Charlotte Cooper and
Kaori Kaneko in Tokyo and Anirban Nag in Sydney; Editing by
Joseph Radford and Chris Gallagher)
