US dollar rallies in Asia on hedge fund buys

TOKYO - The dollar staged an afternoon rally in Asian trading on Tuesday as hedge fund purchases helped push up the unit.

The dollar fetched 99.96 yen from 99.69 yen in New York on Monday, while the euro was at $1.3251 from $1.3254.

The European single currency strengthened to 132.48 yen from 132.10 yen in US trading.

"There have been large buying orders of the euro/yen pair by hedge funds," said a senior dealer at a major bank in Japan.

"That's helping push up the dollar/yen" rate.

The dealer added that the dollar-yen rate could push higher as risk appetite grows after Tokyo's successful bid to host the 2020 Olympics as well as Moscow's proposal on Syria raising the possibility of a US military strike being delayed or shelved.

Earlier in the session, the dollar faced selling pressure partly driven by weak US jobs data.

The figures last week threw into question the timeline for the US Federal Reserve to start pulling back on its huge stimulus drive, known as quantitative easing.

All eyes are on the central bank's policy meeting next week for signs of a draw down on the scheme. A pull back would likely push the dollar's value higher.

"The USD may be helped by a relatively firm US retail sales reading expected at the end of the week but tapering uncertainty will likely act to restrain any topside," Credit Agricole said.

Yen trading has been dominated by data on Monday showing Japan's economy grew more than expected in April-June.

China also reported upbeat economic figures at the weekend with a better-than-expected trade performance in August, as stronger exports to recovering overseas markets caused the trade surplus to widen to $28.5 billion.

On Tuesday, fresh figures showed Chinese industrial production rose 10.4 per cent last month, its fastest increase for more than a year in another positive sign for the world's second-largest economy.

The euro is treading water as markets look for fresh clues about the health of the 17-nation currency club.

"The eurozone economy remains weak and will contract this year, but there are already signs of improvement, with positive data surprises being revealed," Credit Agricole said.

The dollar weakened against other Asia-Pacific currencies.

The US unit slipped to 64.16 Indian rupees from 65.24 rupees Monday afternoon, to 43.92 Philippine pesos from 44.38 pesos, to Sg$1.2690 from Sg$1.2751 and to 32.11 Thai baht from 32.29 baht.

The dollar also sank to Tw$29.66 from Tw$29.75 and to 11,323 Indonesian rupiah from 11,585 rupiah. The greenback was also down at 1,085 South Korean won from 1,088 won.

The Australian dollar rose to 92.63 US cents from 91.92 cents, keeping its uptrend after a conservative election win at the weekend.

The Chinese yuan edged down to 16.25 yen from 16.27 yen.