FOREX-Yen nurses losses, markets wary after finmin intervention remarks

Ian Chua
Thursday, 14 Nov 2013 | 6:13 PM ET

* Yen holds at two-month lows vs USD, two-week lows vs EUR

* Markets wary after JPY intervention remark, slower Q3 Japanese growth

* Weak euro zone GDP data knocks EUR/USD lower

* Yellen's Senate hearing offers no surprises

SYDNEY, Nov 15 (Reuters) - The yen languished at two-month lows against the dollar early in Asia on Friday, having weakened broadly after Finance Minister Taro Aso told a parliamentary committee Japan must retain currency intervention as a policy tool.

Even the euro, which was knocked lower against the dollar by worryingly weak euro zone data, held its ground at two-week highs versus the yen.

The dollar last traded at 100.06 yen, after climbing as far as 100.15 overnight -- a high not seen since Sept. 11. The euro fetched 134.59 yen, not far off Thursday's peak of 134.70.

For the week, the dollar is up 1.0 percent on the yen, while the euro is 1.7 percent higher.

Aso said on Thursday that as with any other country, Japan needed to ensure it retains currency intervention as a policy tool and be ready to take action when markets are excessively volatile.

His comments came after data showed Japan's economy slowed in the third quarter, although not by as much as feared.

"The standout performer was USD/JPY," said Stan Shamu, market strategist at IG in Melbourne.

"A slower reading for Japan's Q3 GDP saw talk of further stimulus from the BoJ ramp up along with comments by Finance minister Aso who said FX intervention is a policy option."

Against the greenback, the euro slipped to $1.3456, pulling back from a one-week high of $1.3499.

Investors sold the euro after figures showed the euro area economy all but stagnated in the third quarter, keeping alive expectations the European Central Bank should do more to stimulate growth.

That helped the dollar index recover most of its losses suffered late in New York on Wednesday, when dovish remarks by Federal Reserve Chair nominee Janet Yellen were first published.

Yellen continued that tone at a Senate hearing on her nomination to head the U.S. central bank, robustly defending the Fed's bold steps to spur economic growth and calling efforts to boost hiring an "imperative".

"Overall the tone of Yellen's speech was dovish in line with expectations, and added limited new information for the market," JPMorgan analysts wrote in a note to clients.

The dollar index last stood at 80.975, having pulled up from a one-week trough of 80.737. The greenback also rebounded against commodity currencies, with the Australian dollar slipping to $0.9311 from $0.9388.

There is no major economic data scheduled for release in Asia on Friday. In Europe, the region's finance ministers meet in Brussels for a second day to outline plans to deal with banks still in difficulty.