Yen lower, dollar steady

The yen fell on Monday while the dollar held near recent highs as risk appetite remained robust in holiday-thinned trade as equities and commodities gained ground. Trade was thin around Europe as many market participants were off for the period between Christmas and New Year and because the UK was closed for a public holiday.
There was little market impact from news over the holiday weekend of an attempt to blow up a passenger plane flying to Detroit. Monday is the last business day of the year for many Japanese companies, which resume on January 4. The focus for many is whether the dollar will continue to rise next month after its rebound from a 14-year low on the yen in November.
"Some corporates out of Japan may have been active in the yen, but it's very, very quiet here, and I think (European) companies will have done 99.9 percent of what they had to do this year already," said Antje Praefcke, currency strategist at Commerzbank Corporates and Markets in Frankfurt.
The yen was broadly weaker as investors took advantage of quiet markets to position themselves ahead of a likely pickup in activity in the New Year, analysts said. The dollar was up 0.3 percent at 91.18 yen, not far off a two month high set last week. The euro was up also 0.3 percent at 131.76 yen.
"Now's a good time in lower volumes for Japanese investors to send money overseas," said Geoffrey Yu, FX strategist at UBS. "Clients are likely to buy dollar/yen on a risk trade next year and clients are taking advantage of thin conditions to do so now." With volumes at very low levels, single trades of any significant size are capable of moving the market.
The yen - which tends to weaken as risk appetite firms - was also pressured as equity markets and commodity prices rose with the FTSEurofirst 300 up 0.4 percent at 1043.13 and crude trading above $78 per barrel and copper up 1.2 percent. The euro was steady at $1.4402.
The dollar index, a gauge of its performance against six other major currencies, was steady at 77.61, off a 3-1/2-month high of 78.45 set last week. The dollar has risen nearly 1 percent against the yen this year so far, after falling roughly 19 percent in 2008.
Traders are looking to see if US Treasury yields continue to rise, with a total of $118 billion of auctions due this week. Other factors that could also move the dollar this week could include Standard & Poor's/Case-Shiller home price index for October and US consumer confidence for December on Tuesday.