FOREX-Yen reclaims lost ground against dollar, euro

Reuters - UK Focus

* BOJ Kuroda sticks to upbeat stance on economy

* Trading activity winding down ahead of Easter holidays

* Yellen stresses need for interest rates to stay low

By Lisa Twaronite and Ian Chua

TOKYO/SYDNEY, April 17 (Reuters) - The yen bounced back froma one-week low against the dollar on Thursday, with investorstaking their cues from recently volatile Japanese equities,though activity was thin as investors wound down trading aheadof the Easter holidays.

The dollar bought 102.01 yen, down 0.2 percent on theday and moving back toward last Friday's 3-1/2-week low of101.32 yen.

It rose as high as 102.37 yen in the previous session afterthe Nikkei stock average rallied on comments fromJapanese Finance Minister Taro Aso that the market took tosuggest more stock buying by the government's pension fund. TheNikkei was slightly higher in afternoon trade on Thursday.

The euro edged down about 0.1 percent against its Japanesecounterpart to 141.14 yen, after hitting a two-weekhigh of 141.77 yen on Wednesday.

"Instead of being driven by fundamentals, the yen and thestock market are moving in relationship to each other this week,as investors adjust their positions ahead of the Easterholiday," said Ayako Sera, senior market economist at SumitomoMitsui Trust Bank.

While markets in Tokyo will remain open, some countriesaround the world would will be closed on Friday ahead of EasterSunday, and others will remain closed on Monday. This meanstrading liquidity is likely to be low, market participants said.

Some investors apparently used Bank of Japan GovernorHaruhiko Kuroda's comments as an excuse to buy back the yen,even though his remarks contained nothing new, Sera said.

The central bank chief said nothing to indicate that moreeasing steps would be forthcoming anytime soon. Kuroda said theBOJ will adjust monetary policy when needed, and repeated thatJapan was making steady progress toward achieving its 2 percentinflation target as the economy continues to recover moderately.

Wednesday's U.S. focus was on Janet Yellen's second publicspeech as Federal Reserve Chair, in which she stressed the needfor accommodative policy citing persistently low inflation andeconomic slack.

Her dovish remarks somewhat offset promising data thatshowed the U.S. economy was regaining momentum. U.S. industrialproduction rose at a faster-than-expected clip in March, whilethe Fed's Beige Book report showed economic activity picked upin recent weeks.

That left the dollar little changed against a basket ofmajor currencies in U.S. trade. The dollar index lasttraded at 79.689, slightly lower on the day.

Analysts at BNP Paribas (Milan: BNP.MI - news) said they remained positive on thedollar's outlook.

"With U.S. data surprise measures bouncing now, the Fednearly half way through its tapering process, and U.S. yieldsstill near the bottom of their broad ranges, we see upside risksfor the USD from current levels," they wrote in a note toclients.

The euro edged up against the greenback in Asian trade evenafter data on Wednesday confirmed that euro zone inflation hadslowed to levels not seen since November 2009. That should keepthe pressure on the European Central Bank to act if prices donot rebound.

The euro was last at $1.3838, up about 0.2 percent,though still solidly below a 3-1/2-week peak of $1.3906 touchedlast Friday. (Editing by Shri Navaratnam)

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