By Takashi Mochizuki - TOKYO

The dollar rose to a two-week-high against the yen Monday in Asia, as higher regional shares bolstered investors' appetite for riskier, higher-yielding assets, and they dumped the safe-haven Japanese unit for the U.S. currency.

The greenback rose as high as Y90.69, its highest since Feb. 23 as Asian investors took cues from Japan's benchmark Nikkei 225 Stock Average and China's Shanghai Composite Index.

As of 0450 GMT, the Nikkei was up 1.9% to 10,563.72 and the Shanghai Composite was up 0.82% to 3,056.00.

Higher Asian share prices often push the yen lower, as Japanese investors become more aggressive about investing in overseas assets with higher yields.

The yen's decline, however, isn't likely to continue for long because Japanese exporters still have a vigorous appetite for yen, analysts said. Exporters need a hefty volume of yen ahead of the March 31 fiscal year-end when they close their books.

"We would caution against turning very bearish (about the yen) in the short term," said Adarsh Sinha, a strategist at Barclays Capital.

There is also a risk that demand for yen will increase again if upcoming U.S. economic data, such as Friday's retail sales, turn out weaker than expected, analysts said.

"Markets need to wait for more data to assess the true trend of the U.S. economy," said Tomoko Fujii, a strategist at Bank of America-Merrill Lynch.

The U.S. government said Friday that non-farm payrolls decreased by 36,000 in February from the month before. This was much better than the 75,000 decline economists had expected.

But Fujii said it was "premature to draw a conclusion" about the U.S. economic outlook, as recent U.S. economic reports have contained some negative surprises.

As of 0450 GMT, the dollar was at Y90.41 from Y90.33 Friday in New York. The euro was at $1.3679 from $1.3620 and Y123.70 from Y123.04.

The euro may have entered a long-term upward trend, dealers said, on the belief debt-laden Greece will be able to secure support from its European partners.

"I'm now becoming certain that Greece won't fail. The clouds are clearing for Greece's future," said Jun Kato, a senior dealer at Shinkin Central Bank.

On Sunday, French President Nicolas Sarkozy said a number of European Union nations were preparing a support package for Greece. In Berlin, German Chancellor Angela Merkel said Friday that E.U. members would intervene to rescue Greece if its debt problems threaten to spiral out of control.

The euro may rise above $1.38 in the days ahead if more positive news for Greece comes out, OCBC Bank's currency research team said. The currency last traded above $1.38 on Feb. 11.

The ICE U.S. Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.168 from 80.451

TOKYO (MarketWatch) By Miho Nakauchi -- The euro edged lower against the dollar in Asia on Thursday as U.S. and European banks took profits after the euro hit a two-week high overnight.

Still, the euro may widen losses if any negative news about euro-zone fiscal problem emerges, adding to worries over the economic outlook, dealers said.

Market participants took the austerity measures announced by Greece on Wednesday--embracing spending cuts and tax increases to reduce its gaping budget deficit--as a positive sign. But concerns "haven't completely been wiped away because other areas in Europe may also be suffering debt issues," said Hiroshi Maeba, a senior trader at Nomura Securities.

As of 0450 GMT, the euro was at $1.3683, down from $1.3703 in New York late Wednesday. The euro stood at Y121.03 compared with Y121.17.

Non-Japanese banks and speculators sold the risk-sensitive euro as falls in Japanese shares left them reluctant to take risks, traders said. Japan's benchmark Nikkei 225 Stock Average index was down at 0.9% as of 0450 GMT.

"Foreign bankers used Japanese stock declines as an excuse to take profits," Maeba said.

Also, the near-term direction of the euro and the dollar will largely depend on Friday's U.S. non-farm payrolls report for February.

Some dealers said worse-than-expected figures may push the dollar toward Y88.00 and the euro to Y120.30 on mounting expectations the Federal Reserve won't likely hike its policy rate for the time being.

Economists polled by Dow Jones Newswires expect the report to log a loss of 75,000 jobs in February, compared with 20,000 jobs shed in January.

The policy rate-setting meetings of the European Central Bank and the Bank of England, due later in the day, also warrant attention, dealers said.

The U.S. unit was at Y88.45, almost unchanged from its New York level of Y88.43. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 80.064 from 79.971 in New York.

This just in from FxPro:

Dear Clients

We are delighted to inform you that we have developed and launched a great new trading platform for use on the iPhone.  The platform is called FxPro Trader for iPhone, and is now available for you to download and use completely free of charge, should you decide to become an FxPro client.

The FxPro Trader for iPhone App is easy to use and gives you the financial markets simply by swiping or tapping your fingertip on the iPhone screen.  Now you can easily manage your portfolio on-the-move and never miss the chance to open or close your positions.

To help get you started and support you in your use and understanding of the App, please view and/or download our free user guide: just click here. For more information on the App's Key Features and Benefits, please see below. Please also note that FxPro Trader for iPhone is currently only available in English.

Key Features

With a swipe or tap of your iPhone screen, you can enjoy the following Trading Functions:

Open a new order
Modify open positions
Open a pending order
Modify pending order
Order confirmation
Use of trading charts.

You will also enjoy five major functions of FxPro Trader for iPhone, which are easy to find on the bottom tool bar of the App screen. These are:

Favorites - you can store your favorite quotes that you would like to access quickly and easily, so they can always be viewed in this area
Rates – shows you FxPro's list of all tradable instruments
Positions - this function shows your order details: open positions, balances, and pending orders
History - your trade history gives you the ability to monitor your previous orders and funds within any given timeframe
More - the ‘More' function allows you to access the other available functions of the platform, and also edit other functions in order to have them displayed with the information that you prefer.
Key Benefits essential for your trading needs:

Access major instruments, including forex and CFDs on precious metals, shares, commodities and indices
Confidential trading operations
Designed for traders on-the-move
User-friendly application
View latest Dow Jones news, together with our Economic calendar
All iPhone versions with OS 3.0 or later are supported.
Our fully dedicated Customer Support team is available should you require any further assistance with this or any other FxPro service. Feel free to contact us, 24 hours a day, seven days a week, by Live Chat, Call Back, email or freephone.

In the meantime, we hope you enjoy our FxPro Trader for iPhone App. We wish you happy FxPro trading.

Click here for a detailed description of what FxPro offers

By SUSAN PULLIAM, KATE KELLY and CARRICK MOLLENKAMP

Some heavyweight hedge funds have launched large bearish bets against the euro in moves that are reminiscent of the trading action at the height of the U.S. financial crisis.

The big bets are emerging amid gatherings such as an exclusive "idea dinner" earlier this month that included hedge-fund titans SAC Capital Advisors LP and Soros Fund Management LLC. During the dinner, hosted by a boutique investment bank at a private townhouse in Manhattan, a small group of all-star hedge-fund managers argued that the euro is likely to fall to "parity"—or equal on an exchange basis—with the dollar, people close to the situation say.

George Soros, head of the $27-billion asset fund manager, warned publicly last weekend that if the European Union doesn't fix its finances, "the euro may fall apart."
The currency wagers signal that big financial players spot a rare trading opening driven by broader market gyrations. The euro, which traded at $1.51 in December, now trades around $1.35. With traders using leverage—often borrowing 20 times the size of their bet, accentuating gains and losses—a euro move to $1 could represent a career trade. If investors put up $5 million to make a $100 million trade, a 5% price move in the right direction doubles their initial investment.

"This is an opportunity...to make a lot of money," says Hans Hufschmid, a former senior Salomon Brothers executive who now runs GlobeOp Financial Services SA, a hedge-fund administrator in London and New York.

It is impossible to calculate the precise effect of the elite traders' bearish bets, but they have added to the selling pressure on the currency—and thus to the pressure on the European Union to stem the Greek debt crisis.

There is nothing improper about hedge funds jumping on the same trade unless it is deemed by regulators to be collusion. Regulators haven't suggested that any trading has been improper.

Through small gatherings, hedge funds can discuss similar trades that can feed on each other, in moves similar to those criticized by some investors and bankers in 2008. Then, big hedge-fund managers, such as Greenlight Capital Inc. President David Einhorn, who also was at this month's euro-dominated dinner, determined that the fortunes of Lehman Brothers Holdings and other firms were dim and bet heavily against their securities, accelerating their decline.

An SAC manager, Aaron Cowen, who pitched the group on the bearish bet, said he viewed all possible outcomes relating to the Greek debt crisis as negative for the euro, people familiar with the matter say. SAC's trading position on the euro is unclear.

George Soros, head of the $27-billion asset fund manager, warned publicly last weekend that if the European Union doesn't fix its finances, "the euro may fall apart." Through a spokesman for Soros Fund Management, he declined to comment for this article.

A Greek finance ministry official declined comment. A European Commission spokeswoman said the Commission doesn't comment on market rumors, adding that the EU's executive arm is working toward developing rules to tighten regulation and risk.

Few traders expect the value of the euro to totally collapse, the way the British pound did in 1992 amid a large bearish bet by Mr. Soros. In that famous trade—which traders say led to a $1 billion profit—selling led by Mr. Soros pushed the pound's value so low that Britain was forced to withdraw its currency from the European Exchange Rate Mechanism, causing the pound to drop even more sharply. The euro is an extremely deep market, with at least $1.2 trillion in daily trading volume, dwarfing the British pound's daily trading volume in 1992.

Again, derivatives, known as credit default swaps, are playing a part in the current trading. Some of the largest hedge funds, including Paulson & Co., which manages $32 billion, have bought such swaps, traders say, which act as insurance against a default by Greece on its sovereign debt. Traders view higher swaps prices as warning signs of potential default.

More on Greece
Greece Delays Bond Sale Amid New Turmoil Fed Probes Swaps Deals by Goldman, Others U.K. Pound Tops Euro as Biggest Loser Complete Coverage: Greece's Debt Crisis Since December, the prices of such swaps have more than doubled, reflecting investors concerns about a default by Greece. Paulson had built a large bearish position on Europe, people familiar with the matter say, including swaps that will pay out if Greece defaults on its debt within five years.

Paulson since has closed out that position and has taken the other side of the bet, leaving the firm with a bullish stance now, a person familiar with the matter says.

In a statement, Paulson declined to comment "on individual positions," saying it "does not manipulate or seek to destabilize securities in any markets."

Late last year, hedge funds bought swaps insuring the debt of Portugal, Italy, Greece and Spain, and began making bearish euro bets. More recently, the hedge funds have sold these swaps to banks looking to "hedge," or protect, their holdings of European government bonds, traders say.

In the past year, the overall value of swaps insuring against a Greek debt default has doubled, to $84.8 billion, according to Depository Trust & Clearing Corp. But the net amount that sellers would actually pay in a default rose just modestly over the same period, up only 4% to $8.9 billion, the DTCC says. This suggests that banks and others have bought and sold roughly equal amounts of swaps to hedge their positions, traders say.

The bigger bet against Europe these days is playing out in the vast foreign exchange markets, which offers a plethora of ways to trade.

The focus on the euro began on Dec. 4, when the currency swooned 1.5% following a jobs report in the U.S. that buoyed the dollar.

Between Dec. 9 and 11, some big European and U.S. banks made bearish calls on the euro by buying one-year euro "puts." Puts give the holder the right to sell an investment at a specified price by a set date.

The pressure on the euro soon began building. The currency fell another 1.3% on Dec. 16 when Standard & Poor's downgraded Greek sovereign debt. At that point, some large investors including asset manager BlackRock Inc. had bearish bets on the euro, believing that it couldn't sustain the levels at which it was then trading and that Europe's financial recovery would lag that of the U.S., according to people familiar with their position.

The concerns about Greece heightened on Jan. 20, when investors began to worry that the country would be unable to refinance its heavy debt load, causing the euro to fall another 1.3%.

On Jan. 22 Greece said it planned a five-year 8 billion euro bond sale in the coming days. To stave off speculators, Greece and its investment-bank advisors limited what could be allocated to hedge funds, said a person familiar with the sale. 

By Jan. 28, the value of the new bond had fallen 3.5%, which left investors unhappy.

On Jan. 28 and 29, analysts from Goldman Sachs Group Inc. took a group of investors on a field trip to meet with banks in Greece. The group included representatives from about a dozen different money managers, say attendees, including Chicago hedge-fund giant Citadel Investment Group, the New York hedge fund Eton Park Capital Management, and Paulson, which sent two employees, say people who were there. Eton Park declined to comment.

During meetings with the Greek deputy finance minister and executives from the National Bank of Greece, among other banks, some investors raised tough questions about the state of the country's economy, according to these people.

At the Feb. 8 "idea dinner" hosted by Monness, Crespi, Hardt & Co., a boutique research and brokerage firm, three portfolio managers spoke about investment themes related to the European debt crisis.

During the dinner—featuring lemon-roasted chicken and filet mignon at a private townhouse in Manhattan—a Soros manager predicted that interest rates are going up, people close to the situation say.

Donald Morgan, head of hedge-fund Brigade Capital, told the group he believed Greek debt is an early domino to fall in a contagion that eventually will hit U.S. companies, municipalities and Treasury securities. Mr. Einhorn, meanwhile, who was among the earliest and most vocal bears on Lehman, said he is bullish on gold because of inflation concerns. Mr. Einhorn declined to comment.

By the week of the dinner, the size of the bearish bet against the euro had risen to record levels of 60,000 futures contracts—the most recently available data and the highest level since 1999, according to Morgan Stanley. The data represents the volume of futures contracts that will pay off if the euro sinks to specific levels in the future.

Three days after the dinner, another wave of selling hit the euro, pushing the currency below $1.36.

Journal Communitydiscuss“ These hedge funds are the financial hit-men of our economy. However, they expose themselves and everyone else to incredible risks. These are not good risks. ”
—Alexander Smith In a separate move last week, traders from Goldman, Bank of America Corp.'s Merrill Lynch unit, and Barclays Bank PLC were helping investors place a particularly bearish bet on the euro, traders say.

The trade involved an inexpensive put option that will provide its holder a big payoff if the euro falls to the level of a single U.S. dollar within a year. Known as a "tail-risk" trade because its probability is low, the euro-dollar parity put is a cheap way of ensuring that if the euro sinks dramatically within a year, an investor will generate big returns.

A going price for the bet is around 7% of the amount that a parity-trade would pay off. So, for an investor seeking a $1 million bet, the cost is $70,000. This means that the market currently assigns roughly 14-to-1 odds that parity will be reached. In November, the odds were around 33-to-1, said a person who has seen the trade's pricing.

* Dollar at six-mth high versus basket of currencies

* ECB rate decision due at 1245 GMT, rates seen on hold

* ECB's Trichet speaks 1330 GMT, may spark euro volatility

Article by Neal Armstrong LONDON, Feb 4 (Reuters) - The euro hit a seven-month low against the dollar, knocked by concerns over the fiscal health of peripheral euro zone countries ahead of a European Central Bank policy decision later on Thursday.

Worries over Spain and Portugal have increased as investors speculate the two countries may face similar debt problems to Greece [ID:nLDE6121AC]. Such concerns pushed the safe-haven dollar to a six-month high versus a currency basket.

The euro EUR= hit its lowest level versus the U.S. dollar since June 2009 at $1.3827, according to Reuters data, with analysts expecting the single European currency to remain under pressure.

"The euro remains vulnerable and the market has now turned its attention to Spain and Portugal. Rallies have been short-lived and I am targeting a move towards $1.3745 in the short-term," said BNP currency strategist Ian Stannard.

Traders said moves in the euro could become volatile should ECB President Jean-Claude Trichet make any strong reference to fiscal problems in the euro zone. He will speak after a policy meeting at which the ECB is widely expected to keep interest rates on hold. [nLDE6110RC]

At 1040 GMT, the euro was trading down 0.3 percent on the day at $1.3845. Weakness was attributed to widening in peripheral euro zone bond yield spreads over German benchmarks. [nL9934677]

"Euro/dollar continues to trade off euro zone CDS/bond spreads and looks vulnerable," said ING currency strategist Chris Turner in a note.

STRONG U.S. DATA

Traders sold the single European currency on the view that dismal finances in euro zone countries may hinder any economic improvements in the region, increasing the probability that the U.S. economy may recover faster.

Strong U.S. data this week supported this view ahead of non-farm payrolls numbers due on Friday. A Reuters poll estimates 8,000 jobs were added to the economy last month. [ID:nN03191018]

The dollar .DXY hit a six-month high of 79.715 versus a basket of currencies, trading well above its 200-day moving average. Technical traders said the next resistance was at 80.07, which would be a 38.2 percent Fibonacci retracement of its fall from 89.624 to 74.17 in 2009.

The New Zealand dollar NZD=D4 hit a five-month low of $0.6939 after data showed the country's jobless rate rising to a 10-year high. [ID:nSGE6110KG]

The Australian dollar touched a six-week low of $0.8772 AUD=D4 after Australian retail sales fell more than expected in December. [ID:nSGE6120NF]

Sterling was down 0.3 percent at $1.5845 GBP=D4 before the Bank of England was expected to pause its quantitative easing programme at 1200 GMT. [ID:nLDE6122M4]

Risk-averse traders flocked to the yen, which pushed the dollar JPY= 0.5 percent lower to the day's trough of 90.59 yen. The euro EURJPY=R fell 0.8 percent to 125.50 yen.

By Fabio Alves OF DOW JONES NEWSWIRES

NEW YORK (Dow Jones)--The dollar slid against the euro early Tuesday in New York as speculation that the European Commission will endorse Greece's plan to reduce its budget deficit Wednesday lent support to the single currency.

The euro hit an intraday high against the dollar just before the New York trading got underway as spreads between 10-year Greek government bonds and similar German securities narrowed. The common currency also strengthened against major rivals, including the yen and the U.K. pound.

"The euro is being boosted moderately by (Wednesday's) potential agreement about how Greece is going to deal with its deficit," said Michael Hewson, a currency analyst at CMC Markets in London. "It (an agreement with the EU) eases concerns over Greece in the short term."

Early Tuesday in New York, the euro was at $1.3947 from $1.3930 late Monday, according to EBS via CQG. The dollar was at Y90.71 from Y90.65, while the euro was at Y126.49 from Y126.29. The U.K. pound was at $1.5935 from $1.5962. The dollar was at CHF1.0564 from CHF1.0561.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 79.138 from 79.194.

The spread on 10-year Greek government bonds over bunds dipped below 330 basis points, down from the 400-basis-point peaks seen at the end of last week.

The cost of insuring Greek debt against default was also slightly better at 376 basis points from 380 basis points late Monday, according to CMA Datavision.

"Stabilization of the Greek bond markets ahead of (Wednesday's) EU verdict on the Greek budget plan has provided only limited support for the euro," Brown Brothers Harriman strategists wrote in a note to clients. "The single currency has tended to react more to bad news from Greece than good news and today's euro rally may provide short-term traders with an opportunity to sell."

Greece had a budget shortfall close to 13% of gross domestic product in 2009. It has outlined spending cuts and measures to boost tax revenue, which it said will slash the budget deficit to 3% of GDP by 2012--the limit set by European Union rules.

The Greek plan--on which the commission will release a report Wednesday that will go to EU finance ministers for final approval on Feb. 15 and 16--is crucial for both for Greece and other countries that use the common European currency.

Meanwhile, the Australian dollar tumbled more than 1% against the greenback after the Reserve Bank of Australia stunned financial markets Tuesday with a decision to leave its cash rate target unchanged at 3.75%, saying it needs time to assess the effects of rate rises in late 2009 and hefty increases in bank lending margins.

The central bank said it would resume its policy tightening if the economy grows as expected and many economists expect the RBA could raise interest rates as early as March.

"The message from the RBA seems to be that although the outlook remains for rate hikes, inflation is low enough for the RBA to be able to take its time with these to avoid the risk of a policy mistake," Credit Suisse Group AG strategists wrote in a note to clients Tuesday.

Investors will be eyeing the 10 a.m. EST release of U.S. pending home sales for December as well as Treasury Secretary Timothy Geithner testimony before the Senate Finance Committee on the President's fiscal year 2011 budget.

Wall Street Journal / NEW YORK (Dow Jones) -- The dollar and yen gained strongly against their major rivals Friday as investors concerned over the pace of the global economic recovery took some bets on riskier assets off the table.

Economic data showing a U.S. consumer still under stress, continuing concern over sovereign debt in the euro zone and a possible further tightening of Chinese fiscal policy all worked together to lead investors to the safe-haven dollar and yen.

"Every major region has its own bad story that seems to be coming back into play," said Brian Dolan, chief currency strategist at Forex.com in Bedminster, N.J.

Late Friday in New York, the euro was at $1.4376 from $1.4504 late Thursday, according to EBS via CQG. The dollar was at Y90.82 from Y91.09, while the euro was at Y130.54 from Y131.93. The U.K. pound was at $1.6255 from $1.6335. The dollar was at CHF1.0269 from CHF1.0182.

The ICE Dollar Index, which tracks the dollar against a trade-weighted basket of currencies, was at 77.222 from 76.729.

As a result, Deutsche Bank's PowerShares US Dollar Index Bearish (UDN) exchange-traded fund was trading down 0.68% from late Thursday, while its PowerShares US Dollar Index Bullish (UUP) was up 0.57%. The two exchange-traded funds are based on Deutsche Bank currency futures indexes, whose composition mirrors that of ICE's Dollar Index.

To see the euro's moves against the dollar, please see:

http://dowjoneswebservices.com/chart/view/3282

The euro was among the worst-performing major currencies, slipping more than 0.85% against the dollar and nearly 1.25% against the yen by late Friday.

Continuing concerns over Greece, which is struggling with large deficits and doubts over its sovereign creditworthiness, also weighed on the euro.

European Central Bank President Jean-Claude Trichet said after Thursday's rate-setting meeting the central bank wouldn't offer any euro zone member "special treatment," and said Greece would not be exempt from collateral requirements.

"Fiscal factors have weighed on the euro when those things have been hitting the headlines," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York.

Adding to investors' flight from riskier assets was concern over the U.S. consumer, heightened by the release of J.P. Morgan's fourth-quarter earnings, which noted losses in its card services, consumer lending and retail financial services segments.

J.P. Morgan Chief Executive James Dimon expressed a cautious outlook, noting that "consumer-credit costs remain high, and weak employment and home prices persist."

Survey data released Friday showed the U.S. consumer--considered key to an economic turnaround--remained stressed. The University of Michigan/Reuters consumer sentiment index's preliminary reading for January edged up to only 72.8 from the final December reading of 72.5. Economists had expected sentiment to improve to 74.0.

Currencies reacted little to other U.S. economic data released Friday, including the seasonally adjusted consumer price index, which increased slightly, in line with expectations. Industrial production also registered an uptick, in line with what economists had forecast.

"The numbers that were out [Friday], particularly the consumer confidence data, were not great," sparking some concerns over the pace of the U.S. recovery, said Joseph Trevisani, chief market analyst at FX Solutions in Saddle River, N.J.

Speculation over whether China would further tighten fiscal policy to put the brakes on growth, fueled by data that showed rising bank lending, also led investors away from risk-positive currencies. The yen benefited most from the flight to safety.

Chinese financial institutions extended almost double the amount of new yuan loans in 2009 compared to a year earlier, according data issued Friday on the People's Bank of China's Web site.

Earlier this week, in a small step toward tightening, China's central bank raised its yuan reserve requirement ratio by half a percentage point in a bid to stave off inflation.

If China puts a brake on its economy, and if global growth generally slows, the commodity-backed currencies of Australia, Canada and New Zealand could suffer. All were down against the U.S. dollar Friday.

Growth-sensitive assets including oil, gold and other metal prices slumped. The Australian dollar led the decline in the commodity-backed dollar bloc, dropping nearly 0.9% against the U.S. dollar.

(Fabio Alves in New York contributed to this article.)

-By Bradley Davis, Dow Jones Newswires