* Yen crosses, dollar/yen fall on profit-taking
* Euro/dollar steady after drop, support seen around $1.4772
* Aussie down as CPI dents expectations of bigger rate hike
By Kaori Kaneko
TOKYO, Oct 28 (Reuters) - The yen rose across the board on
Wednesday as investors trimmed stretched risk positions in
higher-yielding currencies with stocks falling following weaker
than expected U.S. data.
The Australian dollar hit its lowest in two weeks as
investors limited their expectations for an aggressive interest
rate increase next week following a rise in consumer price
inflation that was not as steep as some had expected.
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Consumer prices rose 1.0 percent in the third quarter and
1.3 percent for the year. Michael Blythe, chief economist at
Commonwealth Bank, said the reading was a touch higher than
expected and consistent with the idea the central bank would
lift rates at its board meeting on Nov. 3.
"I would say the outcome is probably more in line with a 25
basis point move than a 50 point move," Blythe said.
The Australian dollar rose as high as $0.9208 <AUD=D4> after
the data but later fell 0.7 percent on the day to $0.9106.
Australian short-end swaps <CSRBA=CSAU> showed a roughly 25
percent chance of a 50 basis point hike next week.
The dollar index <.DXY>, a gauge of its performance against
six major currencies, eased 0.1 percent to 76.056 after touching
a two-week high of 76.328 on Tuesday.
The euro stood at $1.4834 <EUR=>, up 0.2 percent from late
U.S. trade, but not making much headway after falling to a
two-week low of $1.4769 the previous day as investors trimmed
long positions after disappointing U.S. consumer confidence
figures [].
It had hit a 14-month high of $1.5064 on Monday.
The yen rose, with traders saying the market was now more
sensitive to news which encouraged reduction of risk positions.
"The currency market is opting to focus on the negative side
of the economy, after U.S. consumer confidence, especially
persistent trouble in the labour market, reinforced investors'
worries about the U.S. economic recovery," said Jun Kato, a
senior chief analyst at Shinkin Central Bank Research
Institute.
"Losses in stocks and commodity prices such as gold led
investors to further cut long positions in yen crosses," he
said.
Traders said there was profit-taking in dollar/yen by
short-term overseas players, and dollar/yen and euro/yen selling
by Japanese players, probably exporters, in particular because
Wednesday is the last day for trades to be settled by the
month-end.
Another trader said losses in yen crosses were partly
impacted by the Aussie's losses against the dollar as well as
falls in stocks.
Against the yen, the euro fell 0.2 percent to 135.55 yen
<EURJPY=R>, pulling back from a more than two-month high of
138.49 yen hit on trading platform EBS on Monday.
The dollar fell 0.5 percent to 91.33 yen <JPY=>, retreating
from a one-month high of 92.33 yen hit on EBS the previous day.
The New Zealand dollar fell 0.5 percent to $0.7404 <NZD=D4>
before the Reserve Bank of New Zealand's rate review on
Thursday. The latest Reuters poll shows no change is expected in
the 2.5 percent cash rate, with economists forecasting the
central bank to start making hikes as early as March next year.
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(Additional reporting by Masayuki Kitano; Editing by Joseph
Radford)
