* Caution on Japan intervention heightened after dollar falls
* Some think Japan may not intervene before weekend G7 meet
* Aussie on track for 27-yr high vs dollar on solid jobs data
* Focus on Trichet's comments at ECB policy meeting
By Hideyuki Sano
TOKYO, Oct 7 (Reuters) - The dollar was mired near a 15-year
low versus the Japanese yen and an eight-month low against the
euro on Thursday on the spectre of more money-printing by the
U.S. Federal Reserve as early as next month.
The dollar is on the verge of sliding to a 27-year low
against the Australian dollar, which shot up after surprising
strength in the job markets revived talk of a rate hike by the
Reserve Bank of Australia.
The dollar's latest decline has made many traders nervous
about Japanese intervention, as the U.S. currency was flirting
with the levels where Tokyo started its first intervention in six
years on Sept. 15.
Still, some market players speculate Japan may refrain from
intervention ahead of a Group of Seven (G7) policymakers meeting
this weekend where the threat of "currency war" is likely to
dominate discussion.
Fuelling that view were comments from U.S. Treasury Secretary
Timothy Geithner on Wednesday that global institutions must
persuade emerging nations such as China to let their currencies
rise or risk a round of competitive depreciations that would
endanger the world economy. [].
Naoyuki Shinohara, deputy managing director of the
International Monetary Fund and former Japanese vice finance
minister for international affairs, also told Reuters he saw
little point in Japan trying to guide the yen. []
The dollar stood at 82.86 yen <JPY=>, edging up from a
15-year low of 82.75 hit on Wednesday as traders suspect Japanese
intervention would most likely take place during Asian trade.
Prime Minister Naoto Kan reiterated on Thursday that the
government would take decisive steps if needed. []
While wariness about intervention is likely to keep the
dollar above Wednesday's low of 82.75 in Asia, traders said the
market might aim later for stop-loss orders around 82.50 yen.
"Geithner's comments show that the U.S. wants a weaker
dollar. In the near term, the dollar could fall as low as 82
yen," said Minoru Shioiri, chief manager of forex trading at
Mitsubishi UFJ Morgan Stanley Securities.
On the charts, it has a support line connecting lows in Nov
2008 and Dec 2009 which comes in at 82.70 yen and an initial
target at 82.10. Resistance is seen at 83.30-50 yen.
AUSSIE SHINES
The Australian dollar <AUD=D4> surged to a two-year high of
$0.9845 and looks set to test resistance at $0.9851. A climb
above that would take it to its highest since 1983.
Australian total employment jumped nearly 50,000 in
September, more than double estimates, in a stark contrast to
unexpectedly soft U.S. private sector jobs data on Wednesday that
sparked a fresh wave of dollar selling.
"As Australia is not in an easing cycle and doesn't have
fiscal problems like the others, the Australian dollar is likely
to remain favoured," said Koichi Yoshikawa, head of FX trading at
BNP Paribas.
Beyond $0.9851, it is likely to test parity with the dollar
and then $1.0236, the 161.8 percent Fibonacci projection derived
from this year's range. []
The euro <EUR=> was steady at $1.3925, within a whisker of an
eight-month high of $1.3949 hit on Wednesday.
The euro faces major resistance around $1.3956, a 50 percent
retracement of its descent from a record peak around $1.6040 in
2008 to a four-year low of $1.1876 hit in June.
Given the market's fixation with U.S. quantitative easing
expectations, however, the euro has more room to gain, especially
if European Central Bank President Jean-Claude Trichet makes it
clear later in the day that he is not going to join the Fed and
the Bank of Japan in pursuit of more monetary easing.
Trichet holds a news conference after a policy meeting, with
interest rates expected to stay at 1.0 percent. []
"If Trichet shows a negative stance towards easing, the clear
difference in their policy stance would likely lead to further
gains in the euro," said Tohru Sasaki, head of Japan rates and
forex research at JP Morgan Chase Bank.
The euro is also likely to gain against the yen, after the
Bank of Japan's easing steps earlier this week including a
programme to purchase various assets, Sasaki said.
The euro fetched 115.38 yen <EURJPY=R>, after hitting a
five-month high of 115.64 yen on Wednesday.
Sterling steadied at $1.5880 <GBP=D4> ahead of the the Bank
of England's Monetary Policy Committee meeting later in the day.
Analysts expect at least one board member will vote for the
central bank to expand its asset purchase programme, and
investors suspect it may eventually adopt quantitative easing,
even though it is expected to stand pat this time.
[]
(Additional reporting by Reuters FX analysts Krishna Kumar in
Sydney and Rick Lloyd in Singapore; Editing by Joseph Radford)
