Reuters: US Dollar Report: FOREX-Yen retreats a bit versus dollar, market awaits BOJ

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FOREX-Yen retreats a bit versus dollar, market awaits BOJ Apr 3rd 2013, 05:51 Wed Apr 3, 2013 1:51am EDT * Yen drifts off one-month high vs USD * Euro slips versus dollar in the wake of weak data * Markets wary ahead of central bank meetings By Masayuki Kitano and Ian Chua SINGAPORE/SYDNEY, April 3 (Reuters) - The yen and the euro inched lower versus the dollar on Wednesday, with trading largely characterized by a lack of conviction as markets awaited policy decisions by the Bank of Japan and European Central Bank on Thursday. Yen bears are worried the BOJ, in its first policy review under new governor Haruhiko Kuroda, might not live up to expectations, as markets are already positioned for aggressive stimulus measures. The dollar firmed 0.1 percent to 93.52 yen, inching away from a one-month low of 92.57 yen set on Tuesday. The dollar was still some way off a 3-1/2 year high of 96.71 yen set last month. "The bar is high for the BOJ to meet or exceed market expectations," said Roy Teo, FX strategist for ABN AMRO Bank in Singapore. Still, Kuroda will probably provide some forward guidance on the prospects for further stimulus measures, and that may help support the dollar against the yen, Teo said. "I do see the 90 to 91 level as quite good support for dollar/yen," he added. Another possible short-term support for the dollar now lies around 92.11 yen, which is the top of the cloud on the daily Ichimoku chart, a popular technical analysis tool. The BOJ is widely expected to ramp up its bond buying and extend the maturities of the bonds it purchases at the April 3-4 policy gathering. Kuroda said on Tuesday that he wants to combine two different schemes that the central bank uses to purchase government debt, reinforcing expectations of bold monetary stimulus. Combining the schemes would allow the BOJ to buy longer-dated bonds more easily and clarify how much it is expanding its balance sheet. "Much of the BOJ dovishness is already priced in and traders remain wary of jumping into short yen positions at current levels," said Vassili Serebriakov, strategist at BNP Paribas. Bets on a radical shift in the BOJ's monetary policy conduct had lifted the dollar some 20.9 percent against the yen over the previous two quarters. Some traders said long positions in the dollar versus the yen have likely been pared back somewhat over the past few weeks, and that the lighter positioning may limit the scope of any sell-on-fact type of drop in the dollar after the BOJ's decision on Thursday. "We have seen much profit taking into this (BOJ) meeting," said a trader at a Japanese bank in Singapore. The trader said he did not agree with a view held by some in the market that traders were still very long the dollar against the yen. "I feel this market to be a bit flattish to slightly long (the dollar)," the trader said, adding that market players now seemed to be expecting the dollar to trade in a 91 to 96 yen range. Meanwhile, the euro slipped 0.1 percent versus the dollar to $1.2805, staying within sight of a four-month low of $1.2750 set last week. The single currency has been on the back foot after a business survey showed on Tuesday that manufacturing across the euro zone fell deeper into decline in March. This has prompted expectations European Central Bank President Mario Draghi would strike a more dovish tone at Thursday's monetary policy meeting. The ECB is widely expected to keep interest rates unchanged at a record low of 0.75 percent at this week's meeting. Link this Share this Digg this Email Reprints

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