Reuters: US Dollar Report: FOREX-Yen falls broadly on expectations for BOJ easing

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FOREX-Yen falls broadly on expectations for BOJ easing Oct 23rd 2012, 04:23 Tue Oct 23, 2012 12:23am EDT * Yen extends recent losses on expectations for BOJ easing * Dollar/yen hits 3-mth high, euro/yen sets 5-mth peak * Sources say BOJ leaning toward easing policy next week * Dollar/yen may head toward 82 yen by year-end -trader By Masayuki Kitano SINGAPORE, Oct 23 (Reuters) - The yen hit a three-month low against the dollar and a five-month trough versus the euro on Tuesday, pressured by expectations that the Bank of Japan will further loosen monetary conditions to help the export-reliant economy face a global slowdown. Earlier, the dollar rose to as high as 80.02 yen on trading platform EBS, its highest level since early July. The dollar later trimmed its gains and last stood at 79.85 yen, down 0.1 percent from late U.S. trade on Monday. The Bank of Japan is leaning toward easing monetary policy again at its Oct. 30 policy meeting, according to sources familiar with its thinking, with policymakers discussing additional steps that could come together with a further increase in its asset buying scheme. While the dollar could face some profit-taking and offers from Japanese exporters at levels above 80.00 yen, it will probably find support at levels near 79.50 yen in the near term, said Hiroshi Maeba, head of FX trading Japan for UBS in Tokyo. "Yen-selling versus the dollar will probably continue ahead of the BOJ (meeting) and while the dollar might see a slight pullback afterwards, I think this trend will persist," Maeba said, adding that the dollar may rise toward 82 yen by year-end. The dollar's rise versus the yen, however, may lose steam if the BOJ were to hold off from monetary easing, he said, adding that the dollar may initially fall to the 79.00 yen to 79.50 yen area in that case and could drop further from there. The balance of flows in the foreign exchange market now seem supportive of the dollar against the yen, given that Japan's trade balance has been in a deficit, and also due to the potential for yen-selling flows related to Japanese firms' overseas investment, Maeba added. YEN FALLS BROADLY News earlier this month of Japanese mobile operator Softbank Corp's $20 billion deal to buy U.S. wireless carrier Sprint Nextel Corp, has refocused attention on Japanese firms' interest in overseas acquisitions and been viewed as a supportive factor for the dollar versus the yen. A likely pick-up in U.S. economic growth toward the year-end and receding worries about a worsening of the euro zone's sovereign debt crisis also bode ill for the yen, said Masafumi Yamamoto, chief FX strategist, Japan for Barclays in Tokyo. "BOJ easing expectations are on the rise, but there are also factors related to the United States as well as an overall improvement in the market's risk sentiment," said Yamamoto, who sees the dollar rising to 83 yen toward the end of the year. The dollar's rise versus the yen has gained steam over the past week after breaching resistance levels on technical charts. The dollar faces more resistance at its late June high of 80.63 yen, while support comes in near 79.45 yen, its 200-day moving average, said Andrew Robinson, FX analyst for Saxo Capital Markets in Singapore. The yen, a safe haven currency that tends to ease when investors' risk appetite improves, hit a five-month low against the euro and a one-month trough versus the Australian dollar. The euro rose as high as 104.59 yen, its strongest level versus the Japanese currency since early May. The euro later trimmed its gains and last changed hands at 104.22 yen, down 0.2 percent from late U.S. trade on Monday. Against the dollar, the euro eased 0.1 percent from late U.S. trade on Monday to $1.3053, staying below a one-month high of $1.3140 set last week. Expectations that Spain will apply for a bailout, prompting the European Central Bank to start buying its bonds, have helped support the euro in recent weeks, although uncertainty over the timing of such a move has helped to limit its gains. Link this Share this Digg this Email Reprints

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