* Dollar near 4-month high against yen, tackles 50 pct
* Euro hits 5-week low, threatens to fall below 200-day
By Hideyuki Sano
TOKYO, Nov 5 The U.S. dollar hit a two-month
high against a basket of major currencies on Monday after job
reports last week highlighted relatively solid U.S. economic
The dollar stood near a four-month high against the yen and
the euro also hit a five-week low, both tackling major chart
points, though uncertainty over Tuesday's U.S. elections
hindered decisive breaks there for now.
The dollar index, a measure of the dollar's value
against six major currencies, rose to as high as 80.629, its
highest level since Sept. 7.
Against the yen, the dollar hovered at 80.53 yen,
little changed from late U.S. levels last week, and just below a
four-month high of 80.68 yen hit on Friday after solid U.S.
U.S. employers stepped up hiring in October to 171,000,
beating even the most optimistic forecast. The jobless rate rose
a tenth of a point to 7.9 percent, though, as more people were
looking for jobs.
Against the yen, the dollar has a major resistance at 80.65,
a 50 percent retracement of its slow but steady decline from
March to September.
"After the dollar/yen has tested a key Fibonacci level, it
needs a bit of consolidation in the very near-term," said Teppei
Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
"But the dollar looks likely to maintain its uptrend. The
dollar charts look bullish and better economic fundamentals in
the U.S. compared to Japan's also favour the dollar," Ino said.
While the U.S. jobless rate still 3 percentage points above
its pre-recession levels, recent uptick in U.S. jobs and
consumption data contrasted with deteriorating economic picture
in Japan and Europe.
Japan's industrial production, a key leading indicator of
the manufacturing-driven economy, has been falling sharply,
helping to prompt the Bank of Japan to ease its policy for two
months in a row -- something it had not done for nearly a
In Europe, data on Friday showed auto sales slumped to 1993
lows, underscoring the impact of the debt crisis on consumption.
The euro fetched $1.2829, flat from late U.S. levels,
after having fallen to as low as $1.2816 in thin early Monday
If the euro on Monday closes below its 200-day moving
average, at $1.28297, that would be the first time since
September, and before the U.S. Federal Reserve started QE3. Such
a closing might signal a departure from its $1.28-$1.32 trading
range since then.
The euro's immediate support is at the Oct. 1 trough of
The euro is also coming under pressure after a Greek court
ruling on Thursday which indicated that pension reform demanded
by foreign lenders may be unconstitutional.
On Monday, Greece's three-party government will submit the
package of measures to parliament, which is likely to pass it by
a slim majority on Wednesday.
On Nov. 11, there will be another crucial vote, on the 2013
budget that Athens must approve to receive aid it needs from the
IMF and European Union to avoid bankruptcy.
But more immediate attention is on the U.S. presidential and
congressional elections as the American economy, despite its
recent firmness, faces a real threat of a renewed recession next
year depending on how Washington deals with the fiscal cliff --
about $600 billion in government spending cuts and higher taxes
due next year.
"Investors hate uncertainty, so there will be a sigh of
relief when the election is over. Provided there is a clear
election result and no change in the divided Congress, then
traders and investors will see it as 'business as usual'," said
Craig James, chief economist at CommSec.
If the party of the winning presidential candidate also gains
control over Congress, "then investors would be expected to
react positively," James said.
With the Republicans seen retaining control of the House,
the re-election of President Barack Obama would be seen as
raising the risk of policy paralysis, which is likely to mean no
fresh deal for the fiscal cliff and a sharp economic downturn
early next year.
On the other hand, if the Republicans win both the
presidency and the Senate, that would be seen as positive for
risk sentiment, though market players see limited chance of that