SYDNEY/TOKYO, June 2 (Reuters) - The dollar hovered at fresh
12-1/2 year highs against the yen on Tuesday, having extended a
bullish run after upbeat U.S. data helped it crack tough
resistance.
Dollar bulls latched onto a survey showing a pick up in U.S.
manufacturing activity and construction spending that pushed
Treasury yields higher, while discounting less upbeat data on
consumer spending.
The U.S. currency came within a whisker of 125.00 yen
, reaching highs not seen since late 2002. It last traded
at 124.84 and on track for its eighth straight day of gains.
"Some profits were taken on the dollar last weekend, but
cash demand remains strong. The feeling in the market is to give
125 yen a try," said Kyosuke Suzuki, director of forex at
Societe Generale (Paris: FR0000130809 - news) in Tokyo.
"The rise by the dollar against the yen has been steep but
sentiment favours testing new highs rather than consolidating,"
he said.
Momentum turned bullish for the dollar after it cracked a
double-top resistance around 122.00 yen last week.
The next chart hurdle is seen around 125.65-125.73, an area
that capped the dollar back in the final months of 2002.
"Despite the speed of the move, we are not looking to fade
it - our end year target is still 132," said Elsa Lignos,
senior currency strategist, at RBC Capital Markets.
The euro eased to $1.0926, having fallen as low as
$1.0887 overnight as it continued to retreat from last week's
peak of $1.1006.
Traders said the fact that its decline has been relatively
shallow suggested there was some degree of optimism that Greece
will ultimately secure a deal and avoid a debt default.
That could also explain why the common currency actually
rose on the yen, reaching its highest in over two weeks at
136.62.
The leaders of Germany, France and Greece's international
creditor institutions agreed late on Monday to work with "real
intensity" in the coming days as they try to clinch a deal in
debt negotiations with Athens.
Athens is due to make a 300-million-euro ($327.93 million)
repayment to the IMF on Friday amid growing doubts about its
ability to meet all this month's financial obligations.
The dollar also gained ground on commodity currencies, with
the Australian dollar briefly dipping below 76 U.S. cents
for the first time in seven weeks.
It last stood at $0.7630, keeping a low profile ahead of the
Reserve Bank of Australia's interest rate decision at 0430 GMT.
While the central bank is considered almost certain to hold
its cash rate at a record low 2.00 percent, traders said it will
need to give a clear easing bias to discourage Aussie bulls.
"Westpac is expecting a mild easing bias, with the RBA
likely to use a phrase such as "scope" for further easing. We
also expect the RBA to repeat that "further depreciation (of the
AUD) seems both likely and necessary," said Sean Callow, senior
strategist at Westpac.
(Editing by Shri Navaratnam)
Reuters by Ian Chua and Shinichi Saoshiro
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