* Yen within sight of record high value 79.75 per dollar
* Yen outperforms vs higher yielders
* Focus remains on FOMC and how much easing is in store
(Adds details, updates prices)
NEW YORK, Oct 29 (Reuters) - The dollar was down against
the yen but edged up against the euro on Friday after U.S.
economic data did nothing to reduce expectations that the
Federal Reserve will commit to a new round of monetary stimulus
next week.
The dollar index, a measure of the dollar's performance
against a basket of six currencies, was flat as investors
positioned for an initial debasement of the currency on the Fed
announcement.
The yen hovered close to the record peak value of 79.75 yen
to the dollar from 1995 with investors betting that the Bank of
Japan will not intervene to weaken the yen before the Federal
Reserve makes its announcement.
The Fed has telegraphed its intent to boost growth by
pumping more money into the economy through direct government
bond purchases. The only uncertainty is how much money the Fed
is willing to spend.
A survey by the New York Federal Reserve of dealers and
investors included scenarios of up to $1 trillion, a figure
larger than recent estimates. []
Analysts say possible scenarios include the Fed starting at
$80 billion to $100 billion a month but leaving itself the
option to buy more. []
U.S. economic reports included an advance read on U.S.
third quarter gross domestic product, which expanded at a 2.0
percent annual rate, as expected. [].
"With growth steady but unimpressive and inflation pressures
very benign, it underscores the Fed's most recent message and
their concern with the inflationary readings," said Vassili
Serebriakov of Wells Fargo in New York. "I do think it confirms
and perhaps reinforces expectations for the Fed's quantitative
easing move next week."
Midway though the New York session, the dollar was down 0.4
percent at 80.49 yen <JPY=>, off a low of 80.46 on trading
platform EBS <JPY=EBS>. Stop-loss orders were reported under
80.40 ahead of a layer of bids from 80.30 to 80.00.
Friday's selling pushed the dollar toward a 15-year low of
80.41 yen and near a record trough of 79.75 also set in 1995.
The yen is rising because Japanese investors are not
exporting enough capital to offset Japan's current account
surplus, nor to offset the hot money that has flowed into the
bill market and excess reserves, said Marc Chandler, said Marc
Chandler, Global Head of Currency Strategy at Brown Brothers
Harriman said in a note.
While the yen's strength against the dollar is likely to
revive concern the Japanese authorities could intervene again
to stem the currency's appreciation, investors continue to push
the Japanese currency higher.
The Bank of Japan on Thursday said boosting its 5 trillion
yen ($61 billion) asset-buying plan was a "strong option" if
the outlook for the economy sharply deteriorated.
[].
The BOJ advanced its next policy review to Nov. 4-5, right
after the U.S. Federal Reserve meets, which markets took as a
sign it was ready to act swiftly if the outcome of the Fed's
Nov. 2-3 meeting triggered heavy dollar selling.
[].
The 80-yen level "seems to be the new line in the sand,"
said Greg Salvaggio, vice president of trading at Tempus
Consulting in Washington.
The euro <EURJPY=> fell as much as 1 percent to a session
low of 111.52 yen.
The euro slipped 0.2 percent to $1.3900 <EUR=>, leaving the
dollar index <.DXY> down 0.1 percent at 77.278.
(Reporting by Nick Olivari; additional reporting by Wanfeng
Zhou; Editing by Padraic Cassidy)
