* Dollar hit by Japanese exporter selling
* Nikkei falls 2.4 percent, risk aversion lifts yen
* Activity subdued due to year-end holidays
By Rika Otsuka
TOKYO, Dec 24 (Reuters) - The dollar slipped against the yen
on Wednesday, pressured by selling from Japanese exporters a day
after dismal U.S. growth and housing data suggested a prolonged
recession ahead.
The euro rose versus the dollar after European Central Bank
President Jean-Claude Trichet said on Tuesday that market
participants have underestimated the importance of the steps the
central bank has taken so far, cooling expectations for a euro
zone interest rate cut in January.
Activity was light as many traders and investors in Asia had
left for the holidays, while those who were still working
concentrated on position-squaring, reluctant to take fresh
positions.
"The dollar is staying above the 90 yen level just because
those who had sold the U.S. currency before Christmas are buying
it back," said Tsutomu Soma, senior manager of foreign assets at
Okasan Securities. "The dollar's long-term outlook remains
bearish as data continues to show how weak the U.S. economy is."
The dollar fell 0.7 percent from late U.S. trade to 90.30 yen
<JPY=>, giving back gains made on Tuesday.
The U.S. currency rose versus the yen the previous day as
investors locked in profits on the Japanese currency's sharp
rally to a 13-year peak near 87 yen earlier this month.
Traders said Japanese exporters were dollar sellers as they
expect the U.S. currency to resume its slide next year, wanting
to repatriate their profits when it hovers above the
psychologically important 90 yen.
U.S. data showed on Tuesday the world's biggest economy
shrank 0.5 percent in the third quarter and existing home sales
fell by a record amount last week as the recession picked up
pace. []
The euro rose 0.4 percent against the dollar to $1.3968
<EUR=>. Against the yen, the single European currency was down
0.4 percent at 126.22 yen <EURJPY=R>.
Expectations that the ECB will be more cautious about cutting
rates -- now at 2.5 percent -- are likely to continue to support
the euro, although another round of heavy euro buying is seen as
less probable.
"The ECB's stance, which is more hawkish than expected,
already lifted the euro last week and that alone would not spark
another sharp rally in the single currency," said Minoru Shioiri,
senior manager of FX trading at Mitsubishi UFJ Securities.
"I expect exchange rates to move little for the rest of the
week," Shioiri said.
The yen climbed against the Australian and New Zealand
dollars as a fall in Tokyo shares prompted Japanese investors to
shun risk and trim overseas assets.
The Australian dollar dropped 1.1 percent to 61.28 yen
<AUDJPY=R>, while the New Zealand dollar slid 0.5 percent to
51.28 yen.
The Nikkei average <> closed down 2.4 percent.
But yen buying was not as aggressive as percentage changes
indicate, with thin volume exaggerating moves in the market.
Investors were looking towards a batch of U.S. data later in
the day, including data on weekly jobless claims, November
durable goods and November personal income and consumption.
[]
Economists in a Reuters survey forecast 560,000 new filings
for jobless benefits in the week ended Dec. 20, compared with
554,000 in the prior week. Consumption is likely to have fallen
0.7 percent, while durable goods orders probably dropped 3.0
percent versus a 6.9 percent decline in October, according to
Reuters surveys.
Traders said the currency market reaction to the data is
difficult to forecast as the market is currently driven by
technical factors rather than economic fundamentals.
(Additional reporting by Kaori Kaneko; Editing by Chris
Gallagher)
