Yen retreats versus high-yielders

The yen fell on Wednesday, extending broad losses as Asian stocks climbed, while investors reckoned that a rally that pushed the Japanese currency to an 18-month high against the dollar this week had gone too far. The dollar gained against the yen, but stayed weak against other currencies as investors shunned it on the view that a struggling US housing sector and lingering credit problems could hurt the broader economy.
The yen slid against the Australian and New Zealand dollars as Asian equities tracked gains in US shares, which rebounded on Tuesday after Goldman Sachs reassured investors that it does not face big credit market losses.
Stronger stocks stung the yen after the Japanese currency had surged in the past week, when falling risk demand due to weaker stocks and credit concerns had prompted an unwind in risky carry trades to sell the yen for assets in higher-yielding currencies.
"Short covering in the yen was overdone, so we're seeing an adjustment in those positions," said Hideaki Inoue, a forex manager at Mitsubishi UFJ Trust and Banking.
The dollar inched up 0.1 percent to 111.04 yen and kept its distance from an 18-month low of 109.12 yen hit on Monday. But the dollar edged lower against a trade-weighted basket of major currencies, and the dollar index fell 0.33 percent to 75.627, inching back towards a record low of 74.978 hit late last week.
Touching on recent currency market moves, Bank of Japan board member Atsushi Mizuno said falls in the dollar's trade-weighted value have helped improve global imbalances by boosting US exports and supporting the nation's economy, a benefit he described as "underestimated."
Mizuno made the remarks in a speech on November 7, a text of which was released by the BoJ on Wednesday. Some traders said they expected the dollar to hover in a 109-112 yen range in the near term, and analysts said that the dollar could be held back by selling by Japanese exporters.
"Exporters are targeting the 115 yen region (to sell the dollar), but that level seems to be out of reach for now, so we may see them moving in the upper 111 yen region," said Osamu Takashima, chief forex analyst at Bank of Tokyo-Mitsubishi UFJ.
The euro rose 0.4 percent to $1.4658 closing in on a record high of $1.4753 hit late last week. The euro gained 0.5 percent to 162.75 yen pulling away from a two-month low of 158.70 yen hit on EBS this week. The Australian dollar climbed 0.8 percent against the low-yielding Japanese currency to 100.16 yen and the New Zealand dollar rose 0.8 percent to 84.92 yen.