WORLD FOREX: Euro Rises Vs Yen, Dlr On Share Market Strength

TOKYO (Dow Jones)--The euro rose modestly against the yen and dollar in Asia Monday, as stronger regional share markets encouraged short-term players to buy the risk-sensitive common currency.
If global share markets remain firm this week, the euro could continue edging up, traders said.
In Asia Monday, regional bourses strengthened, with China's benchmark Shanghai Composite Index up 1.60% midday and Japan's Nikkei 225 Stock Average up 1.0%. That came after the Dow Jones Industrial Average's closed up 1.0% Friday, which boosted the euro against its rivals.
"The market today inherited some euro bullishness from Friday, and with share markets in positive territory, it's more of a 'risk-on' than a 'risk-off' market," said Satoshi Tate, senior vice president of the forex division at Mizuho Corporate Bank. "So it's not at all strange to see the euro extending gains."
At 0450 GMT, the euro traded hands at Y133.51 compared to Y133.06 late Friday in New York. Against the dollar, the common currency stood at $1.4334 compared to $1.4301. The euro could rise to Y135 and $1.4400 later in the week if share markets gained further, Tate said.
Dealers and analysts said the euro was also helped at the expense of the dollar by fears that the U.S. could be slower than Euro-zone countries to scale back massive economic stimulus measures and raise interest rates. The lack of any mention of coordination on such "exit strategies" from the Group of 20 nations' financial heads in the weekend London meeting reinforced that view.
"The absence of talk about a coordinated withdrawal of policy stimulus leaves the market with the expectation that the US will lag other countries in its withdrawal of stimulus (both fiscal and monetary policy)," signaling that the dollar remains prone to falling when global share markets rise, wrote Barclays Capital Research in a report.
Indeed the Dollar Index, which measures the currency's value against six major units including the euro, edged down to 78.06 from 78.16 late Friday in New York.
Further increasing expectations that Washington may be slow to unwind its massive stimulus is the worsening unemployment rate, which payrolls data Friday showed up to 9.7% in August.
But while the dollar fell against other rivals Monday, it gained slightly against the yen, trading hands at Y93.15 at 0450 GMT compared to Y93.03 late Friday in New York. Short-term players were buying the currency, prompted by the stronger regional equities and a rise in U.S. long-term interest rates, with the benchmark 10-year Treasury yield up to 3.43% Friday.
"This week, the dollar/yen seems set to try the upside, looking stronger after it retook the Y93 mark Friday," said Mizuho Corporate Bank's Tate. The currency could rise as high as Y94.50 this week, he said, echoing other dealers in noting substantial selling orders at that level that would likely cap further rises.
Players will be watching U.S. Treasury auctions totaling $70 billion this week for cues on interest rate moves, dealers said.