* China March PMI jumps to 11-month high
* Aussie dollar shines as Chinese hard landing fears ease
* Yen may resume downtrend as fiscal year-end flows fade
* Weaker-than-expected BOJ tankan weighs on yen
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, April 2 (Reuters) – The safe-haven yen
eased and the Australian dollar rose on Monday after
surprisingly strong Chinese factory activity data eased fears
about a hard landing by the world’s second-biggest economy.
The Australian dollar rose 0.5 percent to $1.0399
after a report on Sunday showed activity at big Chinese
factories hit an 11-month high in March.
“This is telling you that there is no hard landing,” said
Rob Ryan, an FX strategist at BNP Paribas in Singapore.
The upbeat data provided some respite for the Aussie dollar,
which had hit a two-month low of $1.0305 last week as investors
fretted about the chance of a sharp economic slowdown in China,
Australia’s single biggest export market.
After jumping to $1.0470 in early Asian trading on Monday,
up more than a full cent compared with its levels in late U.S.
trade on Friday, the Aussie dollar later pared some of its
gains, hurt in part by surprisingly weak Australian housing
data.
Against the yen, the Aussie climbed to 86.30,
pulling well away from last week’s trough around 84.60.
Apart from a brighter economic outlook overseas diluting the
yen’s safe-haven status, it was also hurt by a
weaker-than-expected reading in the “tankan” survey of sentiment
at big Japanese manufacturers, which put the spotlight on
whether the Bank of Japan may conduct additional monetary easing
as early as next week.
“Personally I don’t think that will happen,” said a trader
for a major Japanese bank in Singapore, on chances of the BOJ
conducting further monetary easing in April.
“But I get a strong sense that there is interest to put on
speculative bets, led by offshore players,” he said, adding that
hedge funds were cited as buyers of the dollar against the yen
on Monday morning.
The yen fell broadly, with the dollar rising 0.2 percent to
83.05 yen and the euro up 0.2 percent at 110.80 yen
.
The euro held steady against the dollar at $1.3339.
JAPAN’S NEW FISCAL YEAR
With Japan’s fiscal year-end out of the way, there is now
less chance of the yen drawing support from seasonal fund
repatriation by Japanese companies, market players say.
“Seasonal factors that have been holding back dollar/yen for
the past two weeks or so have been eliminated and it’s plain
sailing from here on in,” said Gareth Berry, associate director
of G10 FX strategy for UBS in Singapore.
“At least that’s the sort of view from the international
investment community,” Berry said, adding that UBS was looking
for the dollar to rise to 85 yen in three months.
Besides the possibility of U.S. Treasury yields heading
higher in the coming months if optimism about a sustained U.S.
economic recovery increases, the BOJ’s monetary policy was
another factor that could help lift dollar/yen, he said.
The Japanese central bank has two policy meetings this
month, a two-day meeting on April 9-10 and another gathering on
April 27.
“If they decide to keep policy on hold on April 10, they can
always choose to ease further on April 27,” Berry said. “The BOJ
has more meetings than any other G10 central bank, so there’s
plenty of scope for further easing throughout the rest of this
year and perhaps as soon as this month.”
In a sign of bearish market sentiment against the yen, a
gauge of market positioning shows that currency speculators had
ramped up net short positions in the yen in the week ended March
27 to the highest since July 2007.
