* Commodity currencies benefit from OPEC output cut deal
* But questions remain on how to cut production
* Dollar/yen up 0.6 pct on risk asset rally
* Euro little changed, eyes on German inflation
By Hideyuki Sano
TOKYO, Sept 29 Commodity-linked currencies held
firm on Thursday after OPEC agreed to cut oil output in the
first such deal since 2008, boosting oil prices while a broad
gain in risk assets dented the yen.
The Organization of the Petroleum Exporting Countries said
it would reduce output to a range of 32.5-33.0 million barrels
per day, a reduction of 0.7-2.2 percent from OPEC estimates of
its current output at 33.24 million bpd.
That lifted oil prices, with international benchmark Brent
futures posting their biggest gains in 2 1/2 months to
a three-week high of $48.96 per barrel.
"It was a surprise that OPEC reached an agreement. It was
even more surprising that they agreed on a production cut," said
Kazushige Kaida, head of forex at State Street in Tokyo.
Reflecting oil's status as Canada's leading export product,
the Canadian dollar climbed to C$1.3054 versus the
greenback after having risen 0.9 percent on Wednesday, its
biggest daily gain in a month.
The Norwegian crown was a clear winner, hitting a near
five-month high of 8.0222 to the dollar and 14-month
high of 9.0085 per euro.
The Australian dollar also hit a three-week high of
$0.7696, as the country exports various natural resources even
though it is a net importer of oil.
Some analysts cautioned that the oil-cut deal is leaving
crucial details on how much each country will produce to be
decided at the next formal OPEC meeting in November, when an
invitation to join cuts could also be extended to non-OPEC
countries such as Russia.
"It could be that everyone is thinking that they don't have
to cut output themselves," said Daisuke Uno, chief strategist at
Sumitomo Mitsui Bank.
"I think the markets are still not fully convinced," he
Still, a jump in oil prices boosted risk assets and
undermined the yen, which is often seen as a safe haven at times
of economic stress.
The dollar rose 0.7 percent to 101.35 yen, extending
its rebound from one-month low of 100.085 touched on Tuesday.
But its rise was blocked for now by technical resistance
from the Ichimoku tenkan line at 101.44. Many market players
think dollar/yen is still firmly in the downtrend seen since the
start of year.
The dollar has weakened against the yen as investors grew
increasingly sceptical of the Bank of Japan's ability to ease
policy and cheapen the yen, with many seeing its stimulus
measures having reached their effective limit.
In addition, traders suspect Washington will be less
tolerant of a cheaper yen given the U.S. presidential election
"While the recovery in oil prices was positive for
risk-taking, there remain other worries, so safe-haven demand
for the yen will remain," said State Street's Kaida.
The euro was little changed at $1.1222, recovering
from Wednesday's low of $1.1182 helped in part by rebound in
shares of Deutsche Bank.
The euro is trading near the middle of its narrow triangle
holding pattern since August.
In the short term, German inflation data could help the euro
if the data shows a rise in consumer prices as expected, said
Masafumi Yamamoto, chief FX strategist at Mizuho Securities.
German annual inflation is expected to reach 0.5 percent in
September from 0.3 percent in August.
"German inflation has been recovering after hitting a bottom
of minus 0.3 percent in April. If we see a number in line with
market expectations, that could dampen expectations of further
momentary easing by the European Central Bank in December," he
(Reporting by Hideyuki Sano; Editing by Shri Navaratnam and