Reuters: US Dollar Report: FOREX-Yen hits one-month high as factory data dents dollar

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FOREX-Yen hits one-month high as factory data dents dollar Apr 2nd 2013, 06:25 Tue Apr 2, 2013 2:25am EDT * Yen hits one-month high vs dollar, euro * USD extends losses across the board after pullback in U.S. manufacturing By Sophie Knight TOKYO, April 2 (Reuters) - The yen shot to a one-month high against the dollar on Tuesday after softer-than-expected U.S. manufacturing data prompted investors to sell the greenback. But further gains for the Japanese currency could be limited as investors wait to see what the Bank of Japan (BOJ) will deliver at its April 3-4 policy meeting. The BOJ is widely expected to ramp up its bond buying and to extend the maturities of the bonds it purchases under new Governor Haruhiko Kuroda. The market has already priced in hefty easing from the central bank, making it hard for policymakers to surprise investors. The U.S. dollar came under pressure after data on Monday showed slowing factory activity in March, raising concerns that the economy is losing momentum due to government spending cuts. The dollar initially found some support from bids at about 93.00 yen, but its drop gained steam once that level was breached and stop-loss selling was triggered at around 92.90. The dollar fell 0.5 percent to 92.80 yen, having dropped to as low as 92.57 yen on trading platform EBS earlier on Tuesday, its lowest since March 1. "If the BOJ manage to surprise the market by introducing easing that goes beyond what's already been supported then the yen is likely to weaken... but with more U.S. data out before the meeting, and other factors on the table, it could reach 90 yen," said Kenichi Asada, manager at Trust & Custody Services. The yen also rose against the euro, which touched its lowest level in about a month at 119.16 yen. The euro was last down 0.5 percent against the yen at 119.30 yen. Possible support for the euro lies at its late February low of 118.74 yen. "If the mood in Europe is risk-off then the yen is likely to stay in focus today," said Asada of Trust & Custody Services. However, a trader at a foreign fund said that it was difficult to read too much into the yen's strength until liquidity returned to normal later on Tuesday. European markets stayed shut on Monday for the Easter holidays. With the dollar under pressure, the euro edged up 0.1 percent to $1.2855, pulling away from a four-month trough of $1.2750 plumbed last week as concerns intensified over the consequences of Cyprus' bailout conditions. However, upside for the common currency is limited due to political uncertainty in Italy and worries about the region's debt problem and dour economic outlook. "As the fundamental outlook for the euro region turns increasingly bleak, the ECB remains poised to strike a dovish tone for monetary policy," said David Song, currency analyst at DailyFX. "We may see a growing number of central bank officials show a greater willingness to push the benchmark interest rate to a fresh record-low as the recession threatens price stability." The European Central Bank holds its policy meeting on Thursday, ahead of U.S. non-farm payrolls on Friday. The Australian dollar edged up 0.4 percent to $1.0462 . The Aussie dollar held firm even as Australia's central bank repeated it had scope to ease policy further. The Reserve Bank of Australia (RBA) kept its cash rate at a record-matching low of 3.0 percent as expected, but left open the possibility of more rate cuts if the economy failed to respond to past monetary stimulus. Link this Share this Digg this Email Reprints

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