* Yen weaker, high-yielding currencies up on U.S. jobs data
* Equities' rise helps cross/yen, profit-taking tempers gains
* Talk that BOJ will loosen policy weighs on yen
By Kaori Kaneko
TOKYO, March 8 (Reuters) - The yen was under pressure on
Monday while demand for higher-yielding currencies was robust
after better-than-expected U.S. jobs data supported optimism
about an economic recovery.
The yen fell broadly, with traders citing yen-selling flows
from hedge funds. Currencies such as the Australian dollar rose
against the yen, getting a boost from a rise in demand for
equities <.MIAPJ0000PUS> and other risky assets.
"The U.S. jobs report last week helped investor anticipation
for further recovery in the next employment report and encouraged
them to seek risky assets," said Mitsuru Sahara, chief manager of
currency derivatives trading at Bank of Tokyo-Mitsubishi UFJ.
The yen was also weighed down by speculation that the Bank of
Japan would further loosen its already lax monetary policy soon
to address deflationary pressure in the economy. []
"Expectations for more easing steps from the BOJ after a
report last week are adding to the reasons for hedge funds to
sell the yen, helping yen crosses higher," said Kosuke Hanao,
head of Treasury product sales at HSBC in Tokyo.
The yen weakened after the Nikkei newspaper reported on
Friday that the BOJ was examining easing again and may decide on
such a move when it meets on March 16-17.
Sources familiar with the matter said the BOJ is likely to
debate this month easing its ultra-loose monetary policy again.
[]
Low interest rates mean the yen tends to fall when risk
appetite rises and as investors borrow the yen to finance more
lucrative trades in other currencies and assets.
The euro rose 0.5 percent against the yen from late U.S.
trading on Friday to 123.65 yen <EURJPY=R>.
The euro hit a two-week high of 123.80 yen on trading
platform EBS earlier on Monday, and added to its 1.6 percent jump
against the yen logged on Friday.
The dollar also touched a two-week high against the yen of
90.69 yen. After trimming some gains, it was 0.1 percent higher
on the day at 90.43 yen <JPY=>.
EYES ON BOJ POLICY
The most likely next step for the BOJ is to expand the
fund-supply operation it put in place in December, under which it
lends to banks at 0.1 percent, either by increasing the size from
10 trillion yen or extending the duration of loans from the
current three months.
But traders said the market is not expecting the BOJ to come
out with any additional easing measures at its policy meeting
next week, given that Friday's jobs data has helped provide some
respite from yen strength.
Not all were convinced that expanding the fixed-rate money
market operation would do much to push down the yen.
Tohru Sasaki, chief foreign exchange strategist Japan at
JPMorgan Chase, said he thought there wouldn't be any impact from
such a move.
One reason is that while the BOJ's decision in December to
launch the fixed-rate fund supply scheme helped push down
short-term yen interest rates, the size of the move was too small
to think there was much actual impact on the yen, Sasaki
continued.
"When you consider how much three-month interest rates have
moved, it was a microscopic change," he said.
Three-month yen LIBOR stood at 0.25 percent on Friday
<JPY3MFSR=>, down roughly 5 basis points from late November, just
before the BOJ unveiled the new fund injection scheme.
If anything, the yen may continue to retreat, especially
against the euro and other crosses, as investors unwind long yen
positions that have piled up, Sasaki said.
The Australian dollar rose 0.3 percent against the yen to
82.32 yen <AUDJPY=R>.
The euro <EUR=> rose 0.4 percent to $1.3675 helped at the
margins by growing support for debt-laden Greece.
In a bid to calm markets, French President Nicolas Sarkozy
promised Greece on Sunday that euro zone countries would help it
overcome its financial problems and vowed a crackdown on
financial speculators Athens blames for its woes. []
Traders say, near term resistance for the euro is seen around
$1.3712, its March 4 high.
The dollar index <.DXY> was 0.3 percent lower at 80.231. The
latest data shows currency speculators cut by more than half
their long bets on the U.S. dollar in the week to March 2.
[].
The U.S. Labor Department said the economy lost 36,000 jobs
in February, leaving the unemployment rate steady at 9.7 percent.
Analysts polled by Reuters expected 50,000 job cuts and a 9.8
percent jobless rate. [].
(Additional reporting by Satomi Noguchi and Masayuki in Tokyo;
Anirban Nag in Sydney; Editing by Joseph Radford)
