Reuters: US Dollar Report: FOREX-Yen rises to 1-week high after BOJ easing underwhelms

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FOREX-Yen rises to 1-week high after BOJ easing underwhelms Oct 30th 2012, 06:53 Tue Oct 30, 2012 2:53am EDT * Yen jumps after BOJ raises asset purchase by Y11 trln * Dollar/yen falls below 200-day moving average * Euro on defensive as Italian bond yields rise * Canadian dollar hits 3-month low vs yen as oil prices fall By Hideyuki Sano TOKYO, Oct 30 (Reuters) - The yen rose to a one-week high on Tuesday as the Bank of Japan's easing steps were perceived as unspectacular, likely putting the currency back into a familiar trading range. The Bank of Japan increased its assets purchase by 11 trillion yen ($138.5 billion), including one trillion yen in risk assets such as stock ETFs, though analyst say some in the market had been hoping for an even bigger buying spree. The dollar fell to as low as 79.25 yen, down about 0.6 percent from late U.S. levels, breaking below an important chart support from its 200-day moving average at 79.52. It also slipped further from a four-month peak of 80.38 hit on Friday, which is likely to prove to be a near-term peak as the dollar's rally driven by BOJ speculation has run its course, said Ayako Sera, senior market economist at Sumitomo Trust Bank. "Market expectations were pretty aggressive. The dollar has probably hit a near-term peak last week. After the BOJ's easing, the market's focus will probably move on to whether the Federal Reserve will take steps in December to deal with the fiscal cliff," she said. The dollar is likely to stay trapped in its well-worn trading range around 77.50-80 yen, she added. Chartists say the next support for the dollar is seen at 78.90, kijun line on the daily Ichimoku chart. The BOJ's easing also came as Japan's industrial production fell 4.1 percent, the largest fall since the aftermath of last year's tsunami and nuclear disaster and worse than economists' forecast, raising worries the country may be slipping into a recession. SUFFERING TERRIBLY The euro stood at $1.2910, unchanged on the day and near last week's low of $1.28825, as the news from crisis-hit southern European countries was not inspiring. Italian bond yields rose on Monday as investors tried to make space on their books ahead of Tuesday's debt auction as they usually do, though traders said a threat by former Prime Minister Silvio Berlusconi to withdraw support for Mario Monti's technocrat government was not helping. Spanish Prime Minister Mariano Rajoy kept financial markets guessing on Monday, saying he would seek a credit line from the euro zone's rescue fund "when I think it is in the interests of Spain". His comments came even after data showed retail sales in the country fell at their fastest pace on record, further darkening the outlook for an economy already mired in recession. "Spain's economy is suffering terribly, which will continue to hit government revenues and a modest decline in bond yields will not solve the problem," said Kit Juckes, strategist at Societe Generale. Yet, expectations that the European Central Bank can start a bond buying programme as soon as Madrid cries for help limited speculative euro selling, keeping the currency in a range of $1.2800/3200 in the previous few weeks. Its 200-day average, at $1.2835 on Tuesday, is seen as a strong support as well. Also showing no inclination to break new ground, the Australian dollar was at $1.0359, up a tad on the day but still within Monday's directionless trading range. Last week, it fell to $1.0230 and then quickly rebounded to $1.0398 in moves likely to keep Aussie-dollar bears cautious. But the Canadian dollar hit a fresh three-month low, breaking through key chart levels including parity against the U.S. dollar as falling oil prices due to Hurricane Sandy added spice to the Canadian currency's downtrend on worries about the global slowdown. The U.S. dollar rose to as high as C$1.0020, having broken above its 200-day moving average around C$0.9995 and closing above parity on Monday for the first time since early August on Monday. Link this Share this Digg this Email Reprints

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