FOREX-Yen, dlr dip as Bernanke moves closer to 2nd term

By Kaori Kaneko

TOKYO, Jan 25 (Reuters) - The yen and the U.S. dollar dipped on Monday while the euro and high-yielding currencies advanced, lifted by reports that Ben Bernanke was moving closer towards being confirmed for a second term as chairman of the Federal Reserve.

Markets have been fretting since late last week over whether Bernanke would be approved for the job. [nN24141266]

Several key senators had announced their opposition to Bernanke's reappointment, spooking investors already unnerved by U.S. President Barack Obama's plans to limit risk-taking by banks. But the Fed chief edged closer to winning support after the Senate's Republican leader predicted he would be confirmed. [ID:nN24167367].

Resilience in Chinese shares and U.S. stock futures DJc1 SPc1, after a 2 percent fall on Wall Street on Friday, also encouraged investors to buy back some currencies, such as the Australian dollar, which were sold off heavily last week.

Still, demand for riskier assets and higher-yielding currencies is likely to remain subdued amid rising concerns over Greece's fiscal problems; worries that China's efforts to curb its surging economy may impair global growth and fears that the populist turn at the White House might impact U.S. bank earnings.

News of Bernanke's possible reappointment and Chinese shares trimming losses encouraged investors to cover short positions in yen crosses, said a trader at a Japanese bank.

But investors are still cautious about the development of President Obama's proposal on bank regulation and it is difficult for them to take on risk more aggressively, he said.

The U.S. dollar rose 0.3 percent to 90.06 yen after falling as low as 89.71 yen on trading platform EBS in early Asian trade, its lowest since late December.

The euro climbed 0.4 percent to 127.57 yen EURJPY=R, off a nine-month low of 126.55 yen hit on EBS last Friday.

The Australian dollar was trading at 81.84 yen AUDJPY=R, right on its 100-day moving average, after hitting 80.75 on Friday, its weakest in nearly a month.

The dollar index .DXY =USD was down 0.1 percent at 78.19, below a 4-1/2-month high of 78.814 touched last week.

The euro rose 0.2 percent to $1.4165, although traders said the single currency was unlikely to run much higher with its 200-day moving average at $1.4315 expected to provide resistance.

The latest numbers from the Commodity Futures Trading Commission showed that speculators increased their net short positions against the euro in the week to January 19.

They also increased their bets against the yen and the U.S. dollar while adding to net long positions on the higher-yielding Australian and New Zealand dollars. [IMM/FX]

Among higher-yielding currencies, the Australian dollar advanced 0.8 percent to $0.9069 and the New Zealand dollar also climbed 0.9 percent to $0.7163.

Still, the U.S. dollar could get a boost from some important events lined up this week. The Federal Reserve's first interest rate meeting of the year will be held on Tuesday and Wednesday.

The Fed is widely expected to keep rates on hold near zero, although it may sound more optimistic about an economic recovery.

Fourth-quarter U.S. gross domestic product numbers are due on Friday and a Reuters poll of economists suggests the economy grew at 4.5 percent, its fastest pace of growth in nearly four years. [ID:nLAG006055]

Overall, we think the improved outlook for the U.S. economy is likely to support the U.S. dollar over the latter part of the week, said Joseph Capurso, currency strategist at Commonwealth Bank. (Additional reporting by Anirban Nag in Sydney; Editing by Joseph Radford)