* Aussie, kiwi lose ground after RBA says rates right for now
* Yen holds near 7-week high vs dollar, steady on crosses
* Official Chinese PMI gives cross/yen brief lift
By Kaori Kaneko
TOKYO, Sept 1 (Reuters) - The yen held near a seven-week peak
on the dollar on Tuesday, while the Australian dollar slipped
after its central bank sounded less hawkish than some had
anticipated.
The Reserve Bank of Australia (RBA), holding its cash rate at
3.0 percent as expected, said the current low level of rates was
appropriate, countering speculation it would adopt an explicit
tightening bias. [] []
"It looks like people who had aggressively priced in the idea
that Australia would increase rates soon trimmed their holdings
of the Aussie slightly," said Ayako Sera, market strategist at
Sumitomo Trust & Banking.
"But as the central bank sees the economy as stronger than
expected, the market hasn't changed its view that Australia will
be the first to normalise its monetary policy," she said.
The Australian dollar <AUD=D4> fell 0.2 percent on the day to
$0.8418, after edging up close to last month's 11-month peak at
$0.8479 ahead of the central bank's statement.
Fellow higher-yielder the New Zealand dollar also backed down
after the RBA statement, slipping from just below August's
11-month peak at $0.6898 to $0.6879 <NZD=D4>, although it was
still up 0.4 percent on the day.
"I think the Reserve Bank has tried not to give too much
extra guidance to the market; there's been no explicit change in
their bias," said Riki Polygenis, an economist at ANZ Bank.
"You can interpret that as the RBA hedging its bets, clearly
rates need to increase from here, but at this point in time the
timing is still uncertain," she said.
Financial markets <CSRBA1Y=CSAU> are pricing in 174 basis
points of rate hikes in the next 12 months, down from nearly 200
they were expecting earlier on Tuesday.
The yen <JPY=> held at 93.07 per dollar, little changed from
late New York levels but below Monday's seven-week high of 92.54
set on trading platform EBS.
Its rise on Monday came in the wake of a victory by Japan's
opposition Democratic Party in elections at the weekend, which
helped push it through chart levels and triggered stop losses.
Foreign investors turned net buyers of Japanese equities in
April and buying accelerated in mid-July and the first two weeks
of August, totalling 1.37 trillion yen ($14.7 billion) in that
period, before turning negative in the third week.
Tohru Sasaki, chief FX strategist for Japan at JP Morgan,
said Japanese investors wanted to see whether foreigners would
take the change in government as positive.
"People are worrying about dollar/yen and the most popular
topic is if foreign investors' Japanese stock purchases continue
or not," Sasaki said.
The yen's gains on Monday were also helped by a fall in the
volatile Shanghai share market <>, which prompted investors
to reduce exposure to currencies viewed as more risky.
Shares around the region were mostly positive on Tuesday and
data from China showed activity in the manufacturing sector in
expansion mode for the six month in a row, giving a slight lift
to commodity-related currencies against the yen. []
The Aussie later shed its gains to stand unchanged at 78.34
yen <AUDJPY=R> but the New Zealand dollar rose 0.4 percent to
63.91 yen <NZDJPY=R>.
The euro was up 0.2 percent at 133.81 yen <EURJPY=R> and rose
0.3 percent to $1.4376 <EUR=>.
(Additional reporting by Charlotte Cooper in Tokyo, Anirban Nag
in Sydney; Editing by Chris Gallagher)
