* Cross/yen's sharp rebound gives lift to dlr/yen
* Yen so far unaffected after report Fujii to resign
* Eyes on possible policy changes if Fujii replaced
By Satomi Noguchi
TOKYO, Jan 6 (Reuters) - The dollar rose against the yen on
Wednesday, recovering from the previous day's sharp fall, as
Japanese investors picked up overseas assets at the start of the
new year in otherwise choppy trade ahead of U.S. jobs data later
this week.
The dollar was also helped by other currencies rebounding
sharply against the Japanese unit after the liquidation of yen
selling positions that had been accumulated in the previous few
weeks finished.
Volatile currency moves in the past few days have largely
been driven by position adjustments, while the market remains
focused on Friday's payroll data which is expected to shape the
outlook for a rate hike from the Federal Reserve and the
direction of the dollar.
"Market players do not have a clear idea how currencies will
react after the U.S. jobs report on Friday, and they want to
hedge against both upside and downside risks for the dollar,"
said a trader at a Japanese trust bank.
"Currency moves may continue to be choppy before Friday," the
trader said.
Traders said the market had not been affected by a report
that Japan's finance minister, Hirohisa Fujii, is to step down
due to poor health.[]
But market players were cautious about possible changes to
the government's fiscal stance and its current policies to fight
deflation, if he resigns.
The dollar erased earlier losses and rose 0.4 percent to
92.06 yen <JPY=>, rebounding higher from Tuesday's low of 91.25
yen on trading platform EBS.
The dollar had climbed to a four-month high of 93.22 yen
earlier this week after a series of solid economic data last
month added to optimism about the U.S. economic recovery and sent
long-term Treasuries yields higher.
The euro and sterling jumped, in part due to buying from
Japanese pension funds after falling earlier, giving a lift to
the dollar versus the yen, traders said.
The euro climbed 0.3 percent to 132.15 yen <EURJPY=R> and the
pound was up 0.3 percent at 147.05 yen <GBPJPY=R>.
The euro dipped 0.1 percent to $1.4356 <EUR=> after falling
the previous day on dollar-buying as it failed to break
decisively above $1.4450.
Also in focus are the ADP's employment report and the ISM
non-manufacturing index for December, along with the minutes from
the Fed's last policy meeting, all due later in the day.
"If figures in the ADP's report, which is seen as a preview
to Friday's non-farm payrolls, come in strong, U.S. Treasury
yields will rise," said a forex trader at a big Japanese bank. "A
rise in Treasury yields is likely to send the dollar back to 93
yen."
FUJII AND HIS SUCCESSOR
The Japanese government had decided to accept Fujii's
resignation, the Nikkei newspaper cited a ruling party lawmaker
as saying, despite the fact that he is one of the few experienced
members of the novice Democratic Party-led government.
[]
Some analysts said if Fujii were to resign, that could
pressure the yen, as some of his previous comments had given the
impression that he accepted a strong Japanese currency.
"Fujii's departure could mean a weaker yen because there is
no one who has similar strong opinions about an appreciating yen
expected to replace him," said Masafumi Yamamoto, chief FX
strategist in Japan for Barclays Capital.
"That could mean talk of intervention will return."
In late September, Fujii said dollar/yen moves then were not
abnormal when the yen was testing its highs versus the dollar
below 90 yen.
But he later back-pedalled by saying he never said he
approved of a strong yen, seeking to dispel speculation the new
government was unlikely to intervene in foreign exchange markets.
But traders said the market view is mixed and there may not
even be an impact as long as economic policy is largely unchanged
and the government and the Bank of Japan continue to fight
deflation.
Deputy finance minister Yoshihiko Noda, another deputy
finance minister, Naoki Minezaki, and national strategy minister
Naoto Kan are said to be among the potential candidates to
succeed Fujii. []
(Additional reporting by Rika Otsuka; Editing by Joseph Radford)
