The dollar inched higher versus the yen on Thursday, getting some respite after falling roughly 3 percent in the past three days as the market unwound stretched positions ahead of the year-end.
The dollar has pulled back from a seven-year peak of 121.86 yen set on Monday as crowded long-dollar trades were thinned out.
It touched a two-week low near 117.45 yen earlier on Thursday but later stabilized and last traded at 118.09 yen, up 0.2 percent on the day. Over the previous three days, the dollar had fallen around three percent versus the yen.
“It’s very, very choppy,” said Stephen Innes, senior trader for FX broker OANDA in Singapore. Innes said some market players now saw an opportunity to buy the dollar against the yen in the wake of its drop over the past few days.
“My feeling is we’ve cleaned out a lot of people right now,” he said, referring to the paring back of long dollar positions, and added that the dollar may start to attract some bids ahead of the U.S. Federal Reserve’s policy meeting next week.
The euro held steady near $1.2455 EUR=, having recovered from a 2-year low of $1.2247 set on Monday.
Despite the dollar’s pull-back this week, traders said its broad longer-term uptrend remained intact and would probably resume next year, especially as speculation on the timing of an interest rate hike by the Federal Reserve heats up.
The New Zealand dollar gained a lift after the Reserve Bank of New Zealand kept interest rates unchanged and sounded less dovish on future monetary policy than some had expected.
The kiwi rose to $0.7872 earlier on Thursday, having surged more than 2 percent after the RBNZ policy decision. It last traded at $0.7814 NZD=D4, having pulled away from a 2-1/2 year low of $0.7609 on Tuesday.
Traders said some in the market had anticipated the central bank would go a step further by adopting a neutral bias. Instead the Reserve Bank of New Zealand said further rate hikes could be expected at a later stage.
That was a “hawkish surprise to the markets,” said Westpac senior currency strategist Imre Speizer, adding the magnitude of the kiwi’s rally probably reflected market positioning.
“However, given interest rates have hardly moved, we expect the upside to be limited,” he said.
The Australian dollar gained a brief lift after data showed that Australian employment rose more than expected in November. However, the jobless rate also edged up to a decade-high of 6.3 percent.
The Aussie dollar last traded at $0.8331 AUD=D4, up 0.1 percent on the day. It rose to as high as $0.8378 earlier on Thursday.
Source : Reuters