* Dollar hovers below 1-month high at 85.94 yen
* Euro hits 1-month high vs dollar, cable also up
* Dollar index falls, yen crosses rise
By Charlotte Cooper and Kaori Kaneko
TOKYO, Sept 17 (Reuters) - The dollar held near a one-month
high against the yen on Friday, capped by technical hurdles on
the charts and expected sales by Japanese exporters but supported
by caution that Japan could resume yen-selling intervention.
It fell against other majors, however, with the euro surging
0.5 percent to a one-month high, helped by buying by long-term
investors, dealers said, while sterling also hit its highest in a
month on the greenback and the yen fell on the crosses.
One trader said the surge against the dollar by currencies
other than the yen was helped by a rise in commodity and share
prices, which boosted the Australian dollar and in turn helped
the euro and others. There was also some talk of flows into the
euro from Middle Eastern accounts and sovereign funds.
The market is nervous of pushing the dollar down too far
against the yen, however, after Japan's first intervention in six
years this week. It fluctuated between 85.60 and 85.90 yen
<JPY=>, about 3 yen above Wednesday's 15-year low at 82.87, which
preceded Japanese authorities' return to yen selling.
Caution about intervention continues to lend the dollar
support when it nears 85.00 yen. Traders said hedge funds that
were dollar bears had been cutting long yen positions since
Wednesday's action and some had not yet finished.
Dealers also said Japanese exporters, who close their books
for the half-year this month, may cap the dollar with sales
around 86.00 yen. One trader said there were substantial sell
orders lined up between 86 and 87 yen.
"Japan's authorities will likely stand ready for intervention
regardless of holidays this month as they want to keep dollar/yen
at least above 85 for exporters at the end of the fiscal
half-year," another trader at a big Japanese bank said.
Some traders said, however, that Japanese authorities may
even want to push the dollar above 86.00, to meet exporter orders
above that threshold.
Japanese markets are closed on Monday and Thursday next week
for public holidays.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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
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NEED TO SELL
"The real key positioning is probably what the corporates and
Japanese investors need to do and I think there are still
corporates out there that need to sell," said Greg Gibbs,
currency strategist at Royal Bank of Scotland in Sydney.
The dollar climbed as far as 85.94 yen on Thursday, its
strongest level since mid-August and challenging resistance from
its 55-day moving average at that level.
It faces further resistance at 86.30 yen, the bottom of the
resistance cloud on its Ichimoku chart, but there is also talk of
some stop-loss buy orders above 86.00 and 86.35.
On the downside, it was supported at 85.60 yen, with the
market jumpy whenever there were sudden moves up from that level.
Barclays analysts said in a client note that while it was
still early days, the downside risk to the dollar had declined.
All in all, analysts doubt that Tokyo's intervention is over,
even though it has propelled the dollar higher. See (LLOYD/)
Japan is considering increasing the amount of funds available
for currency intervention, Kyodo news agency said late on
Thursday, citing sources close to the matter.
The government had about 35 trillion yen in funds that can be
used for intervention this fiscal year and Wednesday's yen sales
cut the amount to around 33 trillion yen, Kyodo said, but did not
say by how much the government is considering expanding the
funds. [].
Money market data from the Bank of Japan late on Thursday
showed Wednesday's intervention may have totalled about 1.76
trillion to 1.86 trillion yen ($20.5-$21.7 billion), in line with
estimates circulating in the market. [].
Japanese Prime Minister Naoto Kan and U.S. President Barack
Obama are set to hold talks on Sept. 23 in New York and the issue
of Japan's currency market intervention will be on the agenda,
the Asahi newspaper said. []
Kan reshuffled his cabinet, retaining Finance Minister
Yoshihiko Noda, who oversaw Wednesday's intervention.
Noda said Tokyo needed to explain its stance to other
countries when it came to intervention, after the action sparked
criticism from policymakers overseas and raised worries about
competitive devaluations. But he said Japan remained ready to
step into the market again if necessary. []
The yen retreated against other currencies. The euro rose to
112.73 yen <EURJPY=R>, a fresh one-month peak, and the Aussie was
up 0.7 percent at 80.89 yen <AUDJPY=R>, after hitting a three
month high at 81.05 yen.
The euro was 0.4 percent higher at $1.3129 <EUR=>, after
hitting $1.3147, and the Aussie climbed 0.8 percent to $0.9436.
The dollar index <.DXY>, a gauge of the currency's
performance against six other major currencies, hit a one-month
low of 80.899.
The index broke down through its 100-day moving average this
week as speculation the Federal Reserve would turn to more
quantitative easing later this year weighed on the dollar.
($1=85.81 Yen)
(Additional reporting by Hideyuki Sano, Reuters FX analysts
Krishna Kumar and Rick Lloyd and IFR Markets senior FX analyst
Haruya Ida; Editing by Edmund Klamann)
