* Dollar near Monday's 2-1/2 year high vs yen
* Yen's downtrend seen intact
* Aussie dollar supported by upbeat Australian data
By Masayuki Kitano
SINGAPORE, Jan 29 The dollar inched lower versus
the yen on Tuesday but hovered within sight of a 2-1/2 year high
hit a day earlier, while the Australian dollar rose on data
showing a rebound in Australian business confidence.
The dollar slipped 0.2 percent to 90.71 yen, but was
not very far from the previous day's high of 91.26 yen, the
greenback's strongest level versus the Japanese currency since
The greenback fell as low as 90.40 yen earlier, pressured by
dollar-selling, possibly from Japanese exporters, ahead of the
0100 GMT Tokyo fixing. Traders also cited dollar offers from
The dollar however, later gained some support versus the yen
as Tokyo shares bounced, traders said. Upbeat sentiment toward
risky assets can weigh on the yen, especially against
"I still think dollar/yen will head higher," said a trader
for a European bank in Tokyo. "In the near term, I think the
dollar will trade between 90 yen to 92 yen," he said.
Selling the yen has been a one-way trade since mid-November,
based on expectations that Japanese Prime Minister Shinzo Abe
would push the Bank of Japan into more forceful monetary easing
to beat deflation.
"Everyone is only thinking about where to buy (the dollar)
on dips," said a trader for a Japanese bank in Bangkok,
referring to the dollar versus the yen.
The Australian dollar rose 0.3 percent to $1.0448,
boosted by a survey showing Australian business confidence
rebounded sharply in December.
The euro slipped 0.2 percent against the yen to 121.92 yen
, staying below Monday's high near 122.90 yen, the
euro's strongest level against the Japanese currency since April
Against the dollar, the single currency fell 0.1 percent to
$1.3438, inching away from an 11-month high of $1.3480
set on Friday on trading platform EBS.
The euro had gained a boost late last week on news about
euro zone banks' early repayments of three-year loans to the
European Central Bank, which suggested that parts of the euro
zone banking system may be on the mend.
The euro, however, faces a series of major resistance levels
near $1.35, including its 2012 high of $1.34869, the 50 percent
retracement of its May 2011 to July 2012 drop near $1.3491, and
the psychologically important $1.3500 level.
Sterling held steady at $1.5700, having hit a
five-month low near $1.5675 on Monday.
Sterling has been weighed down by worries about a weak UK
economy. Recent comments from incoming Bank of England Governor
Mark Carney that there was still scope for monetary policy to do
more in the developed world, have also dented the pound.
Carney, who now heads the Bank of Canada, takes up his post
at the Bank of England later this year.
"The prospect of more activist monetary policy is not
exactly an encouraging one for GBP, certainly not as it comes on
top of a host of other negative developments - an economy that
is triple-dipping, a government that is struggling to cut its
deficit, and soul-searching about the UK's role within the EU,"
wrote analysts at JPMorgan in a note.