US Dollar dips vs yen after BOJ's Kuroda disappoints easing bets

London (Sept 5)  The dollar fell against the yenon Monday, after the head of the Bank of Japan disappointedthose investors who had expected a clear signal that monetarypolicy would be eased further this month.

The greenback hit a five-week high on Friday as markets betthat the U.S. Federal Reserve was still likely to raise interestrates in the coming months, despite disappointing U.S. jobsnumbers. But having gained more than 4 percent against the Japanesecurrency in six days, the dollar stalled on Monday, slippingmore than 0.8 percent as markets digested BOJ Governor HaruhikoKuroda's comments, to 103.15 yen .

Though Kuroda signalled his readiness to further expand analready massive stimulus programme, he did not provide theexplicit hints that some had been waiting for on the chances ofthe BOJ aggressively easing policy at its next review on Sept.20-21. From Zurich, UBS's head of currency strategy Constantin Bolzsaid the factors that had driven the dollar higher against theyen - namely growing expectations of a Fed hike in September andbets on imminent further BOJ easing - had faded somewhat, butthat a fall-back was not surprising given the rapidity of themove.

"We shouldn't forget that we were at 100 yen ten days ago,"Bolz said.

"The (U.S.) labour market wasn't great ... so that took outa bit of steam from the dollar side, and then Kuroda didn't sayanything too clear about further easing at the end of Septemberand so now markets have to level out their bets a little bit."

Data from the U.S. Commodity Futures Trading Commissionreleased on Friday showed that currency speculators increasedtheir bets on the yen in the week ending Aug. 30, but had cuttheir long U.S. dollar bets to an 8-week low. The dollar index, which measures the greenback against abasket of six major currencies , stood at 95.700, managingto stay above a one-week low of 95.189 set on Friday just afterthe U.S. payrolls data.

Nonfarm payrolls rose by 151,000 jobs last month, below the180,000 jobs that economists had expected. "The key test was always going to be last Friday's jobsreport and the data has, perhaps just about, kept Septemberalive as a possibility for a rate increase," wrote Bank ofTokyo-Mitsubishi UFJ currency strategists in a note to clients.

Markets are now pricing in just over a 1 in 5 chance thatU.S. rates will be incresed in September, and a just over 50percent chance that they will be hiked by the end of the year -down from around a 55 percent chance priced in last week beforethe jobs data, according to CME FedWatch.

Source: KitcoNews