* Yen pushes higher as profits taken on growth-linked trades
* Kiwi hits 3-week lows, RBNZ not as hawkish
* Euro/dollar touches 2-week low, U.S. Q3 GDP in focus
By Charlotte Cooper
TOKYO, Oct 29 (Reuters) - The yen rose across the board on
Thursday, extending steep gains particularly on the Australian
and New Zealand dollars as investors took profits on a host of
growth-linked trades that had been in vogue in recent months.
Traders said short-term speculators had been pocketing gains,
with hedge funds said to be booking profits ahead of their
business year-end in November, and as the recent rebound in both
the yen and the dollar saw bets on their weakness unwound.
The New Zealand dollar was also sold after the Reserve Bank
of New Zealand (RBNZ) dropped its easing bias, as expected, but
faced down market pressure for a rate rise as soon as early 2010
with a promise to hold rates low for longer. []
The euro touched its lowest in two weeks against the
greenback while the dollar index <.DXY> rose to its highest in
two weeks, pulling further off a 14-month trough hit last week.
"Positions tilted toward dollar weakness and yen weakness had
piled up and such positions are being dumped," a trader at a
major Japanese bank said.
Share markets around Asia were down about 2 percent after
similar falls on Wall Street on Wednesday, while MSCI's Latin
America stock index <.MILA00000PUS> had shed about 5 percent, in
keeping with the profit-taking on risk and growth-linked trades.
The Australian dollar fell almost 2 percent against the U.S.
dollar on Wednesday, clocking up its biggest one-day fall in
nearly two months, while the kiwi shed 3 percent, its steepest
drop since June, and lost 4 percent on the yen, its biggest
decline since February.
Both have been favoured plays against the low-yielding dollar
and yen this year as investors have anticipated higher interest
rates in economies seen as recovering faster from the global
downturn, and the Aussie has risen about 40 percent against the
greenback since early March.
The yen <JPY=> extended its gains on Thursday, hitting a
three-week high of 80.85 per Aussie dollar <AUDJPY=R> before
trimming gains to 81.22 yen.
The kiwi fell 0.6 percent to 65.00 yen <NZDJPY=R>, struggling
back from a three-week low around 64.70 yen, and dropped 0.2
percent to $0.7190 <NZD=D4>.
"The past few days has been a correction of the dollar's
sell-off, which had gone too far," said Mitsuru Sahara, chief
manager of currency derivatives trading at Bank of
Tokyo-Mitsubishi UFJ.
The euro also fell, after losing about 1.8 percent the
previous day as investors unwound long euro/short yen positions.
It was down 0.2 percent at 133.11 yen <EURJPY=R>, and at its
lowest levels in two weeks.
It edged up 0.1 percent to $1.4728 <EUR=>, after falling
about 0.6 percent on Wednesday. One trader at a Japanese trust
bank said it had technical support at $1.4600 <EUR=>, which is
roughly the upper edge of a cloud on daily Ichimoku charts and a
key level.
Even though the dollar was holding Wednesday's gains on
higher yielding currencies and the euro, dealers said losses in
yen crosses were dragging it down on the yen.
It fell 0.4 percent to 90.40 yen <JPY=>, dipping to its
lowest in a week after a drop of more than 1 percent on
Wednesday.
Traders said the market was watching whether it could hold
above 90.17 yen, which is a 50 percent retracement of its rise to
October's high of 92.33 yen from an eight-month low of Y88.01.
EYES ON U.S. GDP
The market is awaiting the third quarter reading of U.S.
gross domestic product at 1230 GMT, with forecasts for annualized
growth of 3.3 percent after a contraction of 0.7 percent in the
second quarter.
U.S. data this week has raised questions about a
sustained recovery, with consumer confidence dipping to
recessionary levels and new home sales falling unexpectedly.
Goldman Sachs <GS.N> on Wednesday cut its forecast for GDP
growth to 2.7 percent from 3.0 percent after a report on durable
goods, noting that shipments have been somewhat weaker.
[]
Given the risk-trade correction underway, some dealers said
currency markets might react more to weaker figures than stronger
ones, and if so, that could give the dollar a bit more strength
short-term.
"But the reaction to the GDP data could be limited as
investors are probably waiting for big events like the Fed's
policy meeting and the key U.S. jobs report next week," Sahara
said.
The Fed holds a two-day meeting on Nov. 3-4 and the U.S.
employment report for October is scheduled for Nov. 6.
(Additional reporting by Anirban Nag in Sydney, Kaori Kaneko and
Masayuki Kitano in Tokyo; Editing by Joseph Radford)
