* Dollar slips vs basket of currencies; yen crosses rise
* Aussie gains as local media see chance of Tuesday rate hike
* Payrolls reinforce low US rates; G7 sticks with FX formula
By Charlotte Cooper
TOKYO, Oct 5 (Reuters) - The dollar fell on Monday, losing
ground after a G7 ministers meeting at the weekend brought no
surprises, while the Australian dollar gained as speculation
mounted that the country's central bank could raise rates this
week.
The Australian dollar led yen crosses higher, bounding up
more than 1 percent after two influential Australian columnists
wrote that a rate move to 3.25 percent from a record low of 3.0
percent was likely at Tuesday's meeting. []
"The Aussie dollar is getting bought against everything in a
very illiquid market," said a trader at a European bank in Tokyo.
Parts of Australia are closed for a holiday on Monday.
One trader said big Japanese banks had been seen buying yen
crosses but selling by hedge funds had appeared to cap the gains.
The euro climbed to 131.38 yen <EURJPY=R>, from around 130.90
yen late on Friday, and the Australian dollar rebounded more than
1 percent from late New York trade to 78.37 yen <AUDJPY=R>.
Australian markets had been pricing in only a low probability
of a rate increase this week, with many expecting the central
bank would be more likely to raise the cash rate from 3.0 percent
in November.
But the two Australian media columnists said a move to 3.25
percent was now likely at Tuesday's meeting.
"We don't see the urgency for a move and still think
they'll wait, but it sounds like it could be a close call,"
said Annette Beacher, a senior strategist at TD Securities in
Singapore.
Others said that even if Australia keeps rate unchanged this
week, the market view that the country will be the first among
industrialized nations to raise interest rates will remain,
supporting the Aussie.
The Australian dollar, which fell sharply on Friday,
recovered much of its losses to trade at $0.8733 <AUD=D4> on
Monday, although it was still below a high of nearly 14 months at
$0.8860 set last week.
The trader for the European bank said that on the charts it
had resistance at $0.8760/80 and then last week's peak.
The dollar index <.DXY>, a measure of the greenback's
performance against six major currencies, fell 0.3 percent, while
the euro climbed to $1.4634 <EUR=> after ending around $1.4575 on
Friday.
The Group of Seven finance ministers and central bankers, who
met in Istanbul at the weekend, broke no new ground on
currencies, urging China to strengthen the yuan to help correct
global imbalances and saying too much forex volatility tended to
threaten economic stability. []
Analysts said the statement potentially left the dollar open
to further weakness.
"It was the usual mantra about FX volatility and disorderly
movements in exchange rates which we've seen time and time
again," said Mitul Kotecha, global head of FX strategy at Calyon
in Hong Kong.
Weaker-than-expected U.S. jobs data also reinforced
expectations that U.S. interest rates would remain low for a
while. []
"Recent U.S. economic figures have not met expectations and
the market has been adjusting positions to match the real
economy," said Jun Kato, senior chief analyst at Shinkin Central
Bank Research Institute.
The market is looking ahead to U.S. Treasury auctions this
week, with a total of $78 billion in three-, 10- and, 30-year
securities to be sold on Tuesday, Wednesday and Thursday
respectively. []
Against the yen, the dollar held steady around 89.78 yen
<JPY=> with the market undecided whether to push it back down
towards a recent eight-month low of 88.23 yen.
A senior trader at another European bank said the dollar had
support at 89.80 for now, with Japanese exporters expected to be
ready to sell dollars at 90.00-50.
"The market is quite neutral," said another senior trader at
a Japanese bank in Tokyo.
"Although the main scenario of dollar/yen is to the down
side, people don't have a reason to actually buy yen - there's
not a specific story or strategy which will work for yen longs."
Eyes have been on Japan's new government to see if it would
react to the yen's recent climb.
Speaking at the G7 meeting, Finance Minister Hirohisa Fujii
said Japan would take action if currency moves became excessively
one-sided but declined to say if activity moves fell into that
category. []
The Japanese bank trader said he did not expect yen-selling
intervention unless the dollar fell to 80 yen or below. Japan has
not intervened to sell yen since 2004 and analysts and traders
say any such action this time, if it were to happen, would also
depend on the speed of yen appreciation.
(Additional reporting by Wayne Cole in Sydney and Kaori
Kaneko in Tokyo; Editing by Joseph Radford)
