* Investors close shorts in dollar and yen before year-end
* Shares soft after Wall St down, risk appetite capped
* But early selling of risk-currencies abates
* New Zealand dollar off 2-week low, Aussie off lows
By Satomi Noguchi
TOKYO, Nov 20 (Reuters) - The dollar and yen on Friday kept
their broad gains made the previous day but investor selling of
higher-yielding currencies slowed as profit-booking on their
rallies of the past few months eased up.
The Australian dollar edged back from early losses and the
New Zealand dollar climbed off a two-week low as activity in
Asian trading time slowed.
But both currencies, which have been popular trades against
the low-yielding dollar and yen this year, were still about 1.5
percent down on the week after plunging the previous day when
investors cut long positions ahead of a three-day weekend in
Japan and next week's U.S. Thanksgiving holiday.
"It's a smaller version of what we saw yesterday. The risk
currencies are still generally on the weak side but there's been
very little activity in the markets," said Andrew Robinson, FX
market strategist at Saxo Bank in Singapore.
"There are still some buyers on dips on the risk currencies
but not to the extent there were two or three weeks ago."
The dollar index was unchanged on the day at 75.246 <.DXY>,
well above a 15-month low of 74.679 touched on Monday.
The euro slipped 0.1 percent to $1.4915 <EUR=>, still with
talk of double-no-touch options at $1.48-1.51 expiring later on
Friday.
Traders said euro buying ahead of this was putting a bit of a
floor under euro/yen but it could fall after the option expiry
and take dollar/yen with it. The euro was down 0.3 percent at
132.31 yen <EURJPY=R> after dipping close to its 200-day moving
average at 132.13.
The Australian dollar, which dropped as much as 1.6 percent
the previous day to a two-week low of $0.9132, was holding at
$0.9198 <AUD=D4>, little changed from late U.S. business but well
off a 15-month high of $0.9407 struck on Monday.
It got some help from a Japanese asset manager who bought
Aussie dollars against the yen but was still down about 0.2
percent on the day at 81.69 yen <AUDJPY=R>.
The New Zealand dollar extended Thursday's fall of more than
2 percent and hit a two-week low of $0.7256 before recovering
above $0.7300 <NZD=D4> to stand unchanged on the day.
A weak day on stock markets also cooled investor enthusiasm.
Asian shares fell, with Tokyo's Nikkei share average ending down
0.5 percent <>, after a fall in U.S. stocks on another batch
of data pointing to the fragility of the recovery.[]
Traders said the bout of dollar buying this week was partly
seasonal as it could be seeing demand from overseas corporates
ahead of the year-end in addition to investors closing their
dollar shorts.
"Hedge funds are cashing out their positions to prepare for
year-end redemption requests from their clients. And that move is
encouraging others to take profits as well," said the head of a
trading desk at a big Japanese bank.
But against the yen, the dollar faced some pressure with
traders reporting that short-term speculators were testing its
downside. It slipped 0.3 percent to 88.74 yen <JPY=>, within
reach of a six-week low of 88.63 yen hit on trading platform EBS
the previous day.
The Bank of Japan kept interest rates on hold, as widely
expected, and upgraded its assessment on the economy despite
government grumbling that its forecast of a moderate economic
recovery is too rosy. []
Market reaction was largely subdued as the BOJ maintained its
commitment to keep monetary conditions very easy in a statement,
reassuring markets and the government that it was not seeking an
exit from ultra-low rates any time soon.
(Additional reporting by Charlotte Cooper; Editing by Edwina
Gibbs)
