* Profit-taking on euro, Aussie, helps dollar and yen
* But high-yielders, carry trades are still on agenda
* Eyes now on ECB, BoE rate decisions
By Shinichi Saoshiro
TOKYO, Nov 5 (Reuters) - The dollar and the yen edged up on
Thursday as short-term investors and Japanese exporters sold into
a rally in the euro and higher-yielding currencies which followed
a repeated pledge by the U.S. Fed to keep rates low for a while.
With the Federal Reserve meeting out of the way, eyes were on
rate decisions by the European Central Bank and the Bank of
England later in the day, which along with U.S. jobs data on
Friday were helping to keep a lid on big moves. []
[].
But the dollar and yen were expected to remain under pressure
longer term following the Fed's pledge on low rates, a stance
market players said was likely to fuel leveraged carry trades and
boost demand for high-yielding currencies like the Australian and
New Zealand dollars. []
"What we saw was a pick up of dollar and yen carry trades
after the Fed's commitment to an easy policy, and the momentum is
likely to remain," said a trader at a Japanese trust bank.
The U.S. dollar index <.DXY>, which measures the dollar's
value against a basket of currencies, inched up 0.3 percent to
75.863, pulling away from a low of 75.60 struck on Wednesday
which was its weakest level in over a week.
It hit a 14-month low of 74.94 in late October and has been
holding in a downtrend since March.
The euro <EUR=> dipped 0.1 percent to $1.4840, having added
more than 1.0 percent on Wednesday.
It has been in a correction since late October but Citi
analysts said in a client note that as it had not dropped through
its 55-day moving average after dipping to test it this week, the
correction could be coming to an end.
Against the yen the euro lost 0.5 percent to 134.18 yen
<EURJPY=R> after surging more than 1.4 percent in the previous
session to its highest this week.
Traders said the euro's surge drew selling interest from
Japanese exporters, some of whom had lowered their selling
targets in the wake of the yen's recent appreciation.
The dollar fell 0.3 percent to 90.44 yen <JPY=>. Traders said
there was talk exporters were ready to sell dollars at about
91.00 yen.
Still, investors are expected to be wary of selling dollars
too aggressively as the Fed appeared to be more confident about
an economic recovery in its latest statement.
"While this situation supports continued efforts at
accommodation, credit easing is being capped off and officials
are focusing more explicitly on conditions that would signal a
retreat," said Robert DiClemente, chief U.S. economist at Citi.
Traders have said this week that economic data could take on
greater significance to the market as it tries to gauge when the
Fed will change its tone, with jobs data on Friday in focus.
But traders would also be watching equity market performance
to gauge investors' appetite for risk ahead of year-end book
closing and financial sector performance.
Tokyo's Nikkei average <> shed 1.2 percent on Thursday
and the MSCI index of Asia Pacific stocks excluding Japan
<.MIAPJ0000PUS> was down 0.7 percent.
FED OVER, ECB AND BOE TO COME
Market watchers expect the ECB to keep interest rates at a
record low 1.0 percent at its meeting on Thursday. []
The central bank is expected to offer few indications that it
would veer from its loose monetary policy soon, although analysts
are keeping a close eye on any mentions of exit strategies.
Analysts are split on whether the BoE will expand its
quantitative easing policy by 25 billion pounds, 50 billion
pounds or call a halt to it, while keeping key interest rates
unchanged at a record low of 0.5 percent. []
After the Fed's decision to reduce its planned purchases of
agency debt, if the BoE expands its asset buying, it will likely
put downward pressure on the pound, said Ayako Sera, market
strategist at Sumitomo Trust & Banking. []
"But since views are divided and there is no explicit
consensus formed in the market about what the BoE will decide on
its asset purchase programme, the pound could be impacted either
way," she said.
Sterling <GBP=D4> slipped to $1.6522 ahead of the decision at
1200 GMT, from about $1.6558 in late U.S. trade.
Meanwhile, the Aussie <AUD=D4> dipped to $0.9056 from about
$0.9098 in late U.S. trade.
The Australian central bank earlier this week raised its cash
rate by 25 basis points, but markets are uncertain if it will
move again in December after unexpectedly weak retail sales data
released on Wednesday helped temper rate hike expectations.
At 3.50 percent, Australian rates are the highest among major
economies.
(Additional reporting by Anirban Nag in Sydney, Kaori Kaneko in
Tokyo; Editing by Joseph Radford)
