* Dollar up on day vs yen, rises above 90 yen
* Japan's Fujii says won't rule out intervention
* Euro falls to two-week low vs dollar
* U.S. consumer confidence slips in September
(Adds comment, updates prices, changes byline)
By Leah Schnurr
NEW YORK, Sept 29 (Reuters) - The U.S. dollar firmed on
Tuesday, rallying from an eight-month low against the yen after
Japan's finance minister said the government would take action
if currency moves were sharp and irregular.
Japanese Finance Minister Hirohisa Fujii on Tuesday
repeated that global competition to devalue currencies would
be the wrong policy.
However, gains in the dollar were limited as markets still saw room for the yen to rise. For story, click on []. The Japanese currency rose to an eight-month high against th
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"Most central banks don't want to see rapid appreciation,
and if you see the yen have a gradual grind higher versus the
dollar, that may not necessarily send red flags up," said
Gareth Sylvester, currency strategist at HiFX in San
Francisco.
"What they don't want to see is rapid appreciation of two,
three, four percent in as many days ... that's when they start
to get themselves positioned to potentially intervene to stem
the pace of that appreciation," he added.
In terms of technical charts, Monday's dollar/yen move was
the first piece of a bottoming formation, and a
close above 89.79 would provide confirmation, said Camilla
Sutton, senior currency strategist, at Scotia Capital.
Market players may still attempt to push the dollar toward
January's 13-year low of 87.10 yen on the EBS trading platform and only then think seriously about the possibility of intervention, analysts say. Many expect a drop through 85 yen would be nee
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In midday New York trading, the dollar was up 0.7
percent at 90.25 yen, hitting session highs around 90.39.
SAFE HAVEN APPEAL
The dollar rose to fresh two-week highs against the euro
after data showed U.S. consumer confidence fell unexpectedly in
September. []
"That kind of spurred some (safe-haven) demand for the
dollar and helped the dollar push to a new two-week high
against the euro as a result," said Joe Manimbo, currency
trader at Travelex Global Business Payments in Washington.
"That's the type of data that would reinforce expectations
for a sluggish recovery going forward. It's just more evidence
that it's going to be a protracted recovery."
The consumer confidence report offset upbeat U.S. home
prices data released earlier in the session. The
S&P/Case-Shiller composite index of 20 metropolitan areas rose
for a third straight month in July, surpassing forecasts.
Investors are also focused on Friday's key September jobs
report. Another decrease in the pace of job losses could
bolster optimism for an economic recovery and take some of the
shine off the dollar's safety appeal.
The ICE Futures dollar index, which tracks the performance
of the greenback versus a basket of six major currencies, was
up 0.2 percent at 77.231 <.DXY>.
The euro <EUR=> fell 0.5 percent to $1.4550, after dropping
to a two-week low around $1.4527, according to Reuters data, as
short-term players unwound some long euro positions.
European Central Bank President Jean-Claude Trichet said
late on Monday he backed the argument for a strong U.S. dollar
in foreign exchange markets. This sentiment was repeated by ECB
Governing Council member Ewald Nowotny. []
The euro hit a session low against the yen at 130.71 yen
<EURJPY=>, pressured across the board amid a nearly 1 percent
drop against sterling <EURGBP=>.
Against the dollar, sterling <GBP=> gained 0.2 percent to
$1.5921 after a surprising jump in UK sales figures.
(Additional reporting by Gertrude Chavez, Wanfeng Zhou; Editing by Andrew Hay)
