* Dlr/yen loses height after jump on intervention nerves
* Traders cite talk of miss-hit or technical glitch
* Fall in U.S. yields pressures dollar ahead of FOMC
* China data, Asian currencies' rise help euro, Aussie
By Hideyuki Sano and Charlotte Cooper
TOKYO, Nov 1 (Reuters) - The dollar fell against a basket of
currencies on Monday and, after a brief spike against the yen on
intervention speculation, quickly lost height there as well as
talk circulated the jump had been caused by a miss-hit or
technical glitch.
The greenback came under pressure against most other major
currencies, with the euro testing resistance at $1.4000, as the
market gears up for the Federal Reserve to step up money printing
after its policy meeting on Nov. 2-3.
After spiking more than 1 yen to 81.60 yen in early Asian
trade, the dollar gave up its gains and slid back within range of
its 1995 record low of 79.75 yen, with talk of dollar sales
related to redemptions of U.S. Treasuries weighing it down.
Analysts say the market remains fairly short dollars as it
heads into the Fed meeting but short-term players who have
lightened positions recently have room for moving intra-day.
"The market doesn't want to take a big position but if
there's a move, for example on some certain information about QE,
then the market may follow," said Masafumi Yamamoto, chief FX
strategist Japan at Barclays Capital.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a PDF previewing the Fed http://link.reuters.com/pyb23q
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The dollar was flat at 80.38 yen <JPY=> after leaping from
80.35 yen to 81.60 yen <JPY=> very rapidly at about 0000 GMT.
Dealers said the spike came as the dollar/yen price jumped
straight from about 80.40 yen to 80.70 yen on trading platform
EBS, making many suspect possible intervention by Japanese
authorities, who intervened for the first time in more than six
years in September.
With the dollar trending ever closer to the 80.00 yen level
that some see as a possible threshold for intervention, the
sudden rise prompted others to jump on the move, sending the
dollar even higher.
But it quickly gave up its gains as talk circulated that the
spike was caused by a miss-hit or technical glitch, while a
Japanese Ministry of Finance official declined to comment on the
sudden move.
"I think there was (dollar) buying by people who thought
there was intervention," said a trader for a major Japanese bank.
But he said: "Judging from the price action (after that), the
market probably doesn't think right now that there has been any
intervention."
Japan intervened to sell yen for the first time since 2004 on
Sept. 15, intervening repeatedly through the Asian, European and
U.S. trading day to drive the dollar up from a 15-year low.
But most traders think Tokyo has refrained from intervention
since then even as Japanese policymakers continue to warn of
"decisive actions" on currencies if needed.
While players remain on guard against possible intervention,
many traders think such steps are unlikely.
Yunosuke Ikeda, senior FX strategist at Nomura Securities,
said the likelihood of intervention is fairly low in particular
after the G20 meetings, where countries agreed to shun
competitive currency devaluations.
"As long as the dollar/yen's fall is mainly attributable to
the weakness of the U.S. dollar, any justification of unilateral
Japanese intervention will be very difficult," he said.
Unless dollar/yen falls decisively below 80.00 yen and the
yen is appreciating against all other currencies, intervention is
unlikely, Ikeda added.
EURO, AUSSIE RISE
The greenback dropped 0.6 percent against a basket of six
currencies <.DXY> <=USD>. The dollar index, now at 76.83, has
major support at 76.67-70, which is its Oct. 25 low as well as
the 76.4 percent retracement of its rebound in mid-October.
The euro <EUR=> climbed 0.4 percent to $1.3998. Resistance
lies in a band from $1.4000 to about $1.4018, which is the upper
limit of a corrective triangle by Elliot Wave analysis in which
the first leg is the fall from $1.4161 on Oct. 15 to the Oct. 20
$1.3697 low.
Failure at $1.4018 could open the way to a move down to
$1.3750, the lower boundary of the triangle.
The Australian dollar <AUD=D4> rose 0.6 percent to $0.9894
after China's official purchasing managers' index for
manufacturing beat market expectations and hit a six-month high.
Chinese data helped to lift regional currencies and shares.
"It's a bit like the tail is wagging the dog but recently
we've seen the strength in Asian currencies often precedes the
dollar's decline against other majors. Today's is one of those
days," said Koichi Yoshikawa, head of FX trading at BNP Paribas
in Tokyo.
The dollar is also broadly under pressure after U.S. Treasury
yields dropped on Friday, ahead of the Fed's policy meeting. The
yield on U.S. two-year notes <US2YT=RR> fell near a record low.
A recent Reuters poll found that most leading economists
expect the Fed to buy between $80 billion and $100 billion in
assets per month, with totals ranging widely, from $250 billion
to as high as $2 trillion. []
(Additional reporting by Masayuki Kitano and Reuters FX analyst
Krishna Kumar in Sydney; Editing by Joseph Radford)
(Reporting by Hideyuki Sano, Charlotte Cooper and Masayuki
Kitano; Editing by Chris Gallagher)
