FOREX-Yen holds on to gains as stocks slip

Published: Tue, 25 Aug 2009 18:33:30 GMT Hits: 3567

* Yen firm as stocks take a breather from recent rise
* Investors await U.S. housing and consumer confidence data
SYDNEY, Aug 25 - The yen was broadly firmer on Tuesday as investors took a pause from a recent rush to stocks and higher-yielding currencies, with focus shifting to U.S. data later in the day for clues on an uncertain economic recovery.
U.S. stocks <.SPX> ended broadly flat on Monday, having risen late last week after upbeat comments from Federal Reserve chief Ben Bernanke and a surprising rise in home sales.
The Standard & Poor's Case/Shiller report on U.S. house prices for June is due for release on Tuesday. Later, a report on U.S. consumer confidence in August is due for release.
"U.S. consumers remain a key uncertainty for a sustained economic recovery and another dismal reading could easily weigh on the current fragile risk sentiment, sending U.S. dollar and yen higher," said Matthew Strauss, senior currency strategist at RBC Capital.
The euro <EUR=> eased to $1.4288, from $1.4294 late in New York, and was also lower on the yen, dipping to 134.91 <EURJPY=> from 135.09 yen on Monday. The U.S. dollar slipped to 94.39 yen <JPY=>, from 94.48 late on Monday.
The low yielding yen tends to gain when stocks and higher-yielding currencies fall or when weak economic data highlights a long and uncertain road for global recovery.
Growth-linked currencies pared some of their recent gains, although firmer commodities offered them support at the margins. The Aussie <AUD=D4> slipped to $0.8366 from $0.8376 while the New Zealand dollar <NZD=D4> eased to $0.6839 from $0.6847.
Both had hit 2009 peaks earlier this month, before retreating.
No major regional data due Tuesday so currencies are likely to take leads from Asian stocks, with investors keeping a close eye on Shanghai's bourse <.SSEC>.
Later in the European session, revised second-quarter German gross domestic product data may provide direction to the euro. Eurozone data of late has been robust, although European Central Bank President Jean-Claude Trichet has warned against complacency as the economy heals. [nLO175046].
Also, due on Tuesday will be the first of three U.S. Treasury bond auctions slated for this week. First up is a $42 billion two-year auction which will be followed by a $39 billion five-year auction on Wednesday and a $28 billion seven-year auction a day later.
Analysts says a tepid response could highlight the vulnerability of the United States' fiscal position and might be a drag on the dollar.

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