* Risk currencies firm after positive U.S. payrolls
* Dollar looks vulnerable against yen, near 15-yr low
* Kiwi inches up after earthquake
By Hideyuki Sano
TOKYO, Sept 6 (Reuters) - The dollar dipped on Monday and
looked poised to test a 15-year low against the yen after failing
to retain gains made after U.S. jobs data, although caution about
Japanese intervention deterred further yen buying.
Less-dire-than-expected U.S. payrolls data last week eased
market anxiety over chances of a global slowdown and boosted
demand for the euro and growth-leveraged currencies.
"When risk appetite comes back, both the dollar and the yen
are weak. But because the dollar has low interest rates despite
the U.S. twin deficits, its weakness tends to stand out even
against the yen," said Tohru Sasaki, chief FX strategist at J.P.
Morgan Chase Bank.
"This shows the dollar/yen is unlikely to rise whether global
markets are leaning towards risk taking or not," he said.
Dollar/yen inched down 0.1 percent to 84.35 yen <JPY=>, not
far from a 15-year low of 83.58 marked late last month. It rose
briefly to 85.23 after the payroll data, but quickly erased the
gains.
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PDF on Japan yen dilemma: http://r.reuters.com/nef47n
Q+A-Will Japan intervene to curb yen rise?: []
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U.S. non-farm payrolls fell 54,000, a much smaller drop than
the predicted 100,000. Private employment, considered a better
gauge of labour market health, increased 67,000. []
In currency markets, rising risk appetite has tended to help
the euro and higher-yielding currencies in recent months, as
investors increasingly see the greenback as a funding currency
for investments on expectations of a prolonged period of near
zero rates in the U.S.
The euro was little changed at $1.2893 <EUR=>, having risen
to $1.2905 earlier in the day, its highest in nearly three weeks.
Market participants said they believe central banks in Asia,
excluding Japan, are converting dollars into euros after they
intervene in the market to rein in gains in their own currencies
against the greenback. This is lending extra help to the euro,
they said.
Resistance is seen around $1.2920-35, a level where the
currency was capped in mid-August.
The Australian dollar fetched $0.9168 <AUD=D4>, down about
0.1 percent from late U.S. levels last week but still near a
four-week high of $0.9176 hit after the U.S. payrolls figures.
The Aussie faces resistance around $0.9180, its trendline
from highs in April and August, and the $0.9220-25 area, its peak
in early August.
The dollar index, a gauge of the greenback's performance
against a basket of six major currencies, fell 0.1 percent on the
day to 81.999 <.DXY>.
Support is seen at 81.91, a low marked on Aug. 18 and after
that 81.82 -- the 50 percent Fibonacci retracement of the index's
rise from 80.085 to a high of 83.559, both also marked in August.
The yen has been bought in the past few months as investors
tend to favour currencies from countries with a current account
surplus when they want to avoid risky assets.
Japan's positive balance of payments figures mean dollar
selling by Japanese exporters constantly outweighs dollar buying
by Japanese importers, capping the greenback versus the yen.
Many dealers suspect Japanese exporters still have dollars to
offload ahead of their half-year finish at the end of September.
Their offers are expected to be lined up above 85.00 and onwards.
Dollar/yen has had a very high correlation with U.S. yield
levels in recent months. The lower U.S. yields are, the cheaper
the dollar is against the yen, as lower yields tend to discourage
investment in the dollar from Japan.
On Friday, however, the dollar did not make much headway
against the yen even as the payrolls data pushed U.S. yields
sharply higher.
Partly offseting the effect of rises in U.S. yields are
recent spikes in Japanese bond yields. Ten-year Japanese
government bond yields <JP10YTN=JBTC> have gained more than 25
basis points in less than two weeks, a climb that almost matches
the rise in 10-year U.S. yields during the same period.
Currency speculators trimmed their long positions on the yen
last week but they still have big yen long positions, data from
the U.S. Commodity Futures Trading Commission showed on Friday.
Their net long positions were cut to 49,904 from 51,069
contracts the week before. []
Some analysts say the dollar could eventually gain, however,
particularly if Japanese government bond yields stop rising.
"The U.S. dollar appears to be rebounding, which could make
for a rise in dollar/yen to 85-86 yen," said Masafumi Yamamoto,
chief FX strategist at Barclays.
The New Zealand dollar erased slim losses earlier to stand at
$0.7218, up 0.2 percent on the day, after a magnitude 7.1
earthquake struck the country's second-largest city,
Christchurch, causing widespread damage to infrastructure.
(Additional contribution from Reuters analyst Rick Lloyd in
Singapore and additional reporting by Rika Otsuka; Editing by
Edwina Gibbs)
