FOREX-Yen dangles near 4-month low, commodity currencies firm

TOKYO/SYDNEY Fri Nov 2, 2012 2:37am GMT

TOKYO/SYDNEY Nov 2 (Reuters) - The yen sagged to near a four month-low on Friday while commodity currencies held solid gains as investors bet on an upbeat U.S. payrolls report after private employers added jobs at the fastest pace in eight months.

The euro was under pressure after a Greek court ruled the country's pension reform demanded by foreign lenders may be unconstitutional, raising concerns about Athens' ability to implement austerity measures needed to secure bailout money.

U.S. payrolls processor Automatic Data Processing said private employers added 158,000 workers last month, bolstering hopes that a closely watched nonfarm payrolls report due 1230 GMT would also surprise on the upside.

That saw the yen come under broad pressure, and lit a fire under commodity currencies like the New Zealand dollar.

The greenback bought 80.25 yen, up about 0.2 percent from late U.S. levels, having powered to a high of 80.285, just shy of last week's four-month high of 80.38.

A break of major resistance at 80.60-65, triple top marked between May and June as well as a 50 percent retracement of its decline from March to September, would be seen as a major bullish signal on charts.

The yen has its own grief as well as recent Japanese data and most corporate earning reports have been soft, and third-quarter gross domestic product, due on Nov. 11, is also likely to contract.

"The Japanese electronics industry is collapsing. Auto exports to China will be falling sharply. So Japanese exporters' dollar selling will be dwindling... There's no reason to be bullish on the yen," said a trader at a Japanese brokerage.

The dollar's near-term focus is firmly on U.S. jobs. A Reuters poll showed analysts expect a rise of 125,000 U.S. nonfarm payrolls in October. The unemployment rate is seen ticking up to 7.9 percent.

"More important will be the unemployment rate we think, and whether the sharp fall in September, from 8.1 percent to 7.8 percent, is reversed," said Kiran Kowshik, strategist at BNP Paribas.

"A print of 8.0 percent or above could weigh on USDJPY."

Still, Kowshik said market reaction to the jobs data will probably lack conviction given the proximity of the Nov. 6 U.S. Presidential election and the Nov. 8 Chinese Congress that will usher in a new generation of leaders.

END OF CHINA SLOWDOWN?

Commodity currencies were big winners, with the Australian dollar popping above $1.0400, flirting with the October peak of $1.0412. A break there would pave the way for a retest of the Sept. 28 high of $1.0474, then $1.0500.

Against the yen, it matched its August peak of 83.55 yen .

The New Zealand dollar performed solidly as well, rising to a one-month high of $0.8280.

They were helped by improvement in Chinese manufacturing data on Thursday, which raised hopes the worst may be over in China's slowdown.

Other U.S. data out on Thursday, including a drop in new claims for jobless benefits and a sharp improvement in consumer confidence, also underpinned risk appetite, which helped U.S. stocks rise more than 1 percent.

Left out of the risk rally was the euro, which was undermined by fresh worries about Greece.

The Court of Auditors in Greece, which vets Greek laws before they are submitted to parliament, said measures such as increasing the retirement age by two years to 67 and cutting pensions by between 5 and 10 percent could be against the constitution.

The single currency slipped 0.1 percent in Asia to $1.2928 , and was down almost a full cent from this week's high of $1.3021 ahead of a raft of manufacturing surveys from the likes of Germany, France and Italy later in the day.

It remained well within the $1.2800-3200 range seen since September.