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FOREX-Dollar, yen dip on month-end rebalancing

    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

 (Adds quotes, updates prices; previous LONDON)
    By Karen Brettell
    NEW YORK, Jan 29 (Reuters) - The dollar dropped on Friday
while the Japanese yen sank to its lowest since mid-November as
investors rebalanced portfolios for month-end.
    Bitcoin also jumped to a two-week high as a movement by
retail investors to pile into certain stocks expanded to
cryptocurrencies.
    The greenback has been largely rangebound against a basket
of currencies for the past two weeks as investors evaluate
whether a selloff that sent the currency down almost 7% last
year is likely to continue.
    It fell 0.15% on Friday to 90.421 against a basket of
currencies. The index is up 1.34% from a three-year low
of 89.206 reached on Jan. 6.
    "People are waiting for fresh drivers and I don’t think we
get them ‘til next month," said Marc Chandler, chief market
strategist at Bannockburn Global Forex in New York. 
    "The question is whether the dollar’s correction continues
or it is over, and I think that the jury is still out."
    The yen underperformed on Friday even as risk appetite
worsened, hitting a two-month low versus the dollar and a nearly
three-year low against the Swiss franc.
    Analysts attributed the move to several factors, including
the dollar's yield advantage over the Japanese currency and
month-end portfolio reshuffling.
    Bank of Japan policymakers discussed the merits of allowing
long-term yields to move more flexibly around the bank's target,
a summary of opinions at their January meeting showed on Friday.

    Some of the move is also likely due to large short positions
against the greenback being squeezed, said Chandler. “The market
was a bit vulnerable to this,” he said.
    The dollar was last up 0.51% at 104.76 yen. It
earlier rose to 104.94, approaching the 105 level, which
Chandler says is psychologically important.
    "It's a very interesting move especially given that at the
same time global equity indices would suggest that risk
sentiment is not improving as much to justify the move," said
Valentin Marinov, head of G10 FX research at Credit Agricole,
referring to the yen's drop versus the dollar.
    The Japanese currency typically gains a safe-haven bid when
risk sentiment sours.
    Stocks fell on Friday after COVID-19 vaccine data from
Johnson & Johnson hurt sentiment and added to worries over a
growing standoff between hedge funds and retail investors.
    Bitcoin was boosted after Tesla Inc chief Elon Musk
tagged the cryptocurrency in his Twitter biography. Musk wrote
simply "#bitcoin" in his biography on the social media site.

    It was last up at 12% at $37,496. 
    Assets that would benefit from decentralized finance are
gaining traction as some retail traders express frustration that
online trading brokers including Robinhood have curtailed their
ability to trade some stocks and cryptocurrencies.
    The dollar dipped 0.55% to a three-week low against the
Chinese yuan in offshore markets.
    “At the margin, tightening money market conditions in China,
which are boosting local rates and helping lift the CNH out of
its recent consolidation against the USD, may be adding to
broader market anxieties and weighing on USD sentiment,”
analysts at Scotiabank wrote in a report on Friday.
     China's short-term money rates rose for a fifth straight
day on Friday, busting above the central bank's interest rate
corridor ceiling, as an insufficient liquidity injection raised
speculation that a shift to a tighter policy may be underway.

    
    ========================================================
    Currency bid prices at 9:58AM (1458 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Dollar index                 90.4210        90.5640     -0.15%         +0.00%      +90.7800    +90.3630
 Euro/Dollar                  $1.2149        $1.2121     +0.23%         -0.56%      +$1.2156    +$1.2095
 Dollar/Yen                   104.7600       104.2100    +0.51%         +1.40%      +104.9350   +104.2750
 Euro/Yen                     127.26         126.35      +0.72%         +0.27%      +127.3300   +126.3300
 Dollar/Swiss                 0.8883         0.8887      -0.05%         +0.40%      +0.8901     +0.8875
 Sterling/Dollar              $1.3727        $1.3724     -0.01%         +0.44%      +$1.3750    +$1.3657
 Dollar/Canadian              1.2748         1.2829      -0.62%         +0.12%      +1.2874     +1.2748
 Aussie/Dollar                $0.7690        $0.7676     +0.18%         -0.04%      +$0.7704    +$0.7636
 Euro/Swiss                   1.0792         1.0769      +0.21%         -0.14%      +1.0801     +1.0761
 Euro/Sterling                0.8848         0.8832      +0.18%         -1.00%      +0.8870     +0.8826
 NZ                           $0.7220        $0.7175     +0.63%         +0.54%      +$0.7225    +$0.7151
 Dollar/Dollar                                                                                  
 Dollar/Norway                8.5230         8.5890      -0.75%         -0.72%      +8.6545     +8.4930
 Euro/Norway                  10.3535        10.4193     -0.63%         -1.08%      +10.4775    +10.3157
 Dollar/Sweden                8.3260         8.3062      +0.19%         +1.58%      +8.3797     +8.3128
 Euro/Sweden                  10.1165        10.0973     +0.19%         +0.40%      +10.1405    +10.1050
 
 (Additional reporting by Tommy Wilkes in London; Editing by Jan
Harvey)
  
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