Tags: dollar | yen | currency | japan

Dollar Hits Four-Year High Against Yen, Edging Close to 100

Wednesday, 10 Apr 2013 01:03 PM

The dollar rose to a four-year peak against the yen within striking distance of the key 100 mark on Wednesday after minutes of the Federal Reserve's March meeting reinforced expectations of an end to its bond-buying sooner rather than later.

The Fed's stance stood in stark contrast to aggressive monetary easing steps from the Bank of Japan last week when it pledged to pump about $1.4 trillion into the economy in less than two years in a bid to beat decades-long deflation.

A few Fed policymakers expected to taper the pace of asset purchases by mid-year and end them later this year, while several others expected to slow the pace a bit later and halt the quantitative easing program by year-end, according to the Fed minutes, which were released hours ahead of schedule.

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"Once again, the minutes have sounded a slightly more hawkish tone and that's really what's benefiting dollar/yen," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.

The dollar rose to 99.72 yen on Reuters data, matching the high set in May 2009. It was last at 99.54 yen, up 0.5 percent.

The yen recouped most losses after BoJ Governor Haruhiko Kuroda said the bank took all necessary steps for now, but the bounce was short-lived.

Kuroda also said the bank was resolved to keep printing money for as long as needed to achieve 2 percent inflation, signaling his readiness to offer further stimulus or maintain an ultra-easy policy beyond two years if meeting the target by then proves difficult.

"He is saying 'for now' that tells me he will opt for further easing in the future," said Neil Jones, head of hedge fund FX sales, at Mizuho Corporate Bank in London. Jones said the BOJ's attempt to reach 2 percent inflation would imply dollar/yen trading at 110.00.

Traders said hefty options barriers around 100 yen could slow the dollar's rise, but an eventual break above that level looked inevitable.

"Around 100, people have a lot of barriers they try to defend by selling. It makes sense we have stalled but we are going to go through that level, it's just a matter of time," said Geoff Kendrick, currency strategist at Nomura.

Technical resistance lies at 99.73 yen, the 50 percent retracement of the dollar's drop from its June 2007 high of 124.14 yen to a record low of 75.311 yen set in October 2011.

The euro rose 0.5 percent to 130.17 yen, having risen as high as 130.50 yen on Reuters data, the strongest since January 2010.

Against the dollar, the euro was little changed at $1.3077 , after hitting a one-month peak of $1.3121.

In recent days, the euro has been partly supported by market speculation that Japanese investors looking for higher returns may opt for euro zone assets.

Expectations of Japanese buying have pushed French, Dutch, Belgian and Austrian bond yields to record lows in the wake of Japan's aggressive monetary-easing policy decision.

The Australian dollar climbed to a 2-1/2 month high of $1.0540 after data showing Chinese imports surged 14.1 percent on the year, beating market expectations. It was last up 0.6 percent at $1.0539.

Editor's Note: This ‘Third War’ Will Be the Most Destructive in History, Warns Pentagon Adviser

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The dollar rose to a four-year peak against the yen within striking distance of the key 100 mark on Wednesday after minutes of the Federal Reserve's March meeting reinforced expectations of an end to its bond-buying sooner rather than later.
dollar,yen,currency,japan
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2013-03-10
Wednesday, 10 Apr 2013 01:03 PM
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