WORLD FOREX: Dlr, Euro Lose Ground To Yen On Profit-Taking

The dollar and euro gave up some ground to the yen in Asia Monday, as investors took profits following a sharp rise in those currencies against the Japanese unit Friday, while Japanese exporters joined in the selling on a regular settlement day.

But market participants said the yen, considered one of the safest currencies to buy in times of economic turmoil, may decline ahead on growing expectations of a global economy recovery.

As of 0450 GMT, the U.S. dollar stood at Y97.11, compared to Y97.48 in New York late Friday, when it surged almost Y2.5 to briefly mark a two-month high of Y97.79 on better-than-expected U.S. jobs data.

The euro also declined to Y138.03, well below the more-than two-month high it hit Friday in New York at Y138.72, and lower than its Y138.20 level late in that session.

The closely watched nonfarm payrolls data showed 247,000 jobs shed in July, the smallest drop since last August and below the 275,000 decline economists in a Dow Jones Newswires survey had expected.

"The stronger-than-expected showings in U.S. jobs data Friday caused investors to buy (the dollar and euro against the yen), but they sold back in Asia this morning amid a lack of fresh trading factors," said Hideaki Inoue, chief foreign-exchange manager at Mitsubishi UFJ Trust and Banking Corp.

Given the sharp rises Friday, such "profit-taking (today) hasn't been a surprise at all," he added.

The Dollar Index - which measures the value of the U.S. currency against six major units such as the euro - fell to 78.77, compared with 78.95 late Friday in New York. That came as the euro rose to $1.4207, compared to $1.4169.

The yen may face downward pressure in the near term due to mounting expectations for a global economic pickup, dealers said. The dollar may climb to Y98.00, while the euro may rise to Y140.00, they added.

"Expectations of economic recovery have grown," following the positive surprise of Friday's jobs data, said Masashi Hashimoto, a senior analyst at Bank of Tokyo-Mitsubishi UFJ. That suggests that any more better-than-expected economic reports could weigh further on the yen in the weeks ahead, he said.

Options dealers also said there were growing signs that players expect the yen to weaken further.

One such indication came as an investor bought Monday a one-week dollar-call/yen-put options contract, with a Y100 strike price, suggesting concern the U.S. unit may rise above that key psychological level in the coming days.

Looking forward, players' attention will be focused on a planned two-day Federal Open Market Committee meeting starting Tuesday. In addition, they will be watching U.S. data including retail and good sales on Thursday, and the consumer price index and industrial production, all for July. link....