The dollar rose near five-month highs against the yen on Monday and steadied itself against the euro with the help of suspected intervention by Japan to keep the greenback from sliding after Friday's dismal U.S. jobs data. Dealers said bearish dollar sentiment dominated after Friday's news the U.S. economy created far fewer jobs than expected in February convinced markets that yield-boosting U.S. rate hikes remained a distant prospect. But suspected yen-selling by the Bank of Japan (BoJ) kept a floor under the greenback across a range of currencies after its 2-1/2 cent tumble versus the euro on Friday took it down nearly four cents from last week's peaks versus the single currency. "They certainly seem to have put a floor under it against the yen and that is probably also the case versus the euro as well," said Aziz McMahon, currency strategist at ABN AMRO.
"The irony is that if the U.S. economy starts to weaken that would argue for euro/dollar going higher. But it also means if the global economy begins to weaken, European policy makers will worry a lot more about euro appreciation from here than they have done so far." At 0910 GMT, the dollar traded at $1.2362 , a touch firmer from the previous New York close but a good distance from Wednesday's three-month high of $1.2056. It traded a touch firmer on the day at 112.16 yen after rising near Friday's five-month highs around 112.30, which dealers also suspected came with the help of Japanese authorities.
BOJ HASN'T GONE AWAY
Dealers said the dollar's resilience against the yen pointed to possible massive dollar-buying by the authorities to buoy the currency and protect Japan's export-led recovery. "They'll be stepping in whenever they feel necessary. They showed that after the jobs data came out," said Kosuke Hanao, head of forex sales at Royal Bank of Scotland in Tokyo. But some traders said such dollar-buying could not last. "I'm not convinced (the ministry) is going to continue doing this for several months coming," said Naomi Fink, senior currency analyst at BNP Paribas in Tokyo. "I think this is a trend that's particularly inherent ahead of the financial year-end. I don't think they can keep it up for ever." The ministry has spent 10 trillion yen ($89.15 billion) to buy dollars so far this year, compared with 20 trillion yen for all of last year, a record in itself.
LITTLE DATA DUE
Little in the way of major economic data releases is due on Monday, but markets traded nervously ahead of the 1130 GMT news conference of central bankers from the Group of 10 (G10) nations, during the bi-monthly Bank of International Settlements meeting in Switzerland. Markets felt European Central Bank President Jean-Claude Trichet's comments about "brutal" currency moves when the euro scaled record highs in January kept the single currency from breaking $1.30. Trichet also takes part in the Eurogroup meeting of euro zone finance ministers, which starts on Monday. Investors will be eager to see if any more warnings come from Monday's events. "If you want to go long euro/dollar and you didn't do it straight after Friday's U.S. jobs data and get the first upmove, then you probably don't want to do it ahead of these policy maker events," said McMahon at ABN AMRO. "Euro/dollar may tread water today then head higher over the remainder of the week once policy maker events are out of the way."////