Forex Blaster: November 2008

* Dollar falls vs yen as weak data dulls risk appetite

* Safe-haven bid and Obama victory boost dollar vs euro

* Obama's election removes some uncertainty for market

* Weak euro-zone, UK data presage big ECB, BoE rate cuts (Recasts, adds comment, updates prices, changes byline)

By Steven C. Johnson

NEW YORK, Nov 5 (Reuters) - The dollar fell against the yen on Wednesday as weak economic data added to fears about the economy but gained on the euro after Democrat Barack Obama's decisive victory in the U.S. presidential election.

Obama's historic and convincing win helped erase one source of uncertainty for financial markets, analysts said, and that helped boost the dollar against most major currencies.

On his first day as president-elect, Obama was greeted by reports showing employers cut 157,000 private sector jobs last month while the services sector contracted sharply.

"The U.S. election sends the message that there's finally some political certainty, and that's one more risk off the table for markets," said Mark Frey, head of FX trading at Custom House in Victoria, British Columbia.

"But the overall economic picture darkened today, and the overall sentiment on the economy is still quite negative."

Unease about the economy cut demand for riskier assets, including those in euros, sterling and high-yield currencies, and prompted investors to repatriate funds into dollars. U.S. stocks fell, with the Dow industrials .DJI closing down more than 5 percent.

But that anxiety also lifted the yen , which rose some 1.2 percent to 98.33 per dollar as investors bought back the low-yielding currency to repay yen-denominated loans.

The euro fell 0.9 percent to $1.2912 while sterling dropped 0.7 percent to $1.5904 and the Australian dollar shed 2.2 percent to $0.6850 .

A slump in euro zone manufacturing to a fresh decade low also weighed on the zone's common currency and overall risk appetite, boosting expectations of at least a half a percentage point interest rate cut from the European Central Bank on Thursday.

The Bank of England is also expected to cut rates by at least half a point, though markets are increasingly pricing in the chance of a bigger cut to stimulate the British economy.

The ECB and BoE last month each delivered half-point cuts to 3.75 percent and 4.5 percent, respectively, in a coordinated move with other central banks, including the Federal Reserve.

Analysts pointed out, though, that hefty rate cuts would not necessarily hurt the currencies but could instead spark a rally as central banks prove they are taking recession risks seriously.

The same happened earlier this week when the Australian dollar rallied after the Reserve Bank of Australia surprised markets with a bigger-than-expected rate cut.

"The market is likely to reward the ECB and BoE, as it did the RBA, if the central banks take aggressive steps to address the deterioration in their economies," said Brown Brothers Harriman in a research note to clients.

ING analysts pointed out that ECB board member Axel Weber -- often considered a policy hawk -- has "given his blessings" for big rate cuts.

European Central Bank executive board member Juergen Stark told the Financial Times Deutschland that weak euro zone growth and oil price fluctuations could push inflation briefly into negative territory. (Additional reporting by Nick Olivari in New York and Naomi Tajitsu in London; Editing by James Dalgleish)

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