* Aussie slightly higher on solid China trade data
* BoJ holds steady but could ease on April 27
By Antoni Slodkowski
TOKYO, April 10 (Reuters) – The yen came off the day’s lows
against the dollar after the Bank of Japan refrained from more
easing on Tuesday, although many thought it would stay under
pressure on expectations Tokyo will eventually loosen policy
later in April.
The yen was also sold by Japanese importers, trades said,
whose purchases of fossil fuels have jumped as all but one of
Japan’s nuclear reactors have gone offline in the wake of the
Fukushima nuclear disaster in March 2011.
With the economy still fragile and consumer inflation around
zero, the pressure for more stimulus in Japan has not waned
despite February’s surprise easing, which helped the yen weaken
more than 6 percent this year.
Hopes that the BOJ will take further easing steps when it
issues economic outlook and price forecasts on April 27, helped
the yen pull away from a one-month high against the dollar of
81.19 hit on Monday in the wake of weak U.S. jobs data.
“The market is expecting further easing from the BOJ at some
point in April, and this is keeping the yen broadly under
pressure,” said Koji Fukaya, chief currency strategist in Credit
Suisse in Tokyo.
The yen hit the session low of 81.87, to bounce off
the trough after the BOJ decision, and last traded at 81.56, 0.1
percent weaker than late New York levels.
Fukaya added that the yen’s long-term weakening trend was
confirmed on Monday after the dollar failed to dip below support
at 81.07, a 38.2 pct retracement of the dollar’s rally since
February.
To be sure, few market participants think that the yen could
sustain the eye-watering pace of losses that helped fuel nearly
14-percent gains in Japanese stocks this year, as it
remains vulnerable to bouts of short-covering.
Yen net shorts stood at 65,108 contracts in the week ended
April 3, near the previous week’s 67,622 contracts, which was
the biggest net short position since July 2007
A mixture of the broadly weaker yen and a slight shift into
riskier assets in Asia saw the euro gain 0.4 percent on the
Japanese unit to 107.16, with some traders citing
stop-loss buying in the pair triggered by U.S. banks.
Chartists saw resistance for the euro emerging around
108.20, at the 38.2 percent retracement of its March-April fall,
while the top of the Ichimoku cloud, at 106.20 on Tuesday, is an
initial support after it held the previous session.
FED IN FOCUS
The euro was also a shade stronger against the dollar
gaining 0.2 percent to $1.3136 and pulling further
away from a one-month low of $1.3033 hit on Monday.
A break of Thursday’s $1.3165 high would see it target the
top of the Ichimoku cloud at $1.3263, traders said.
Risk assets were reasonably resilient as a large number of
investors seem to be wagering that soft U.S. payrolls data may
bring forward the next round of quantitative easing.
“The market, as always, is holding out hopes that the Fed
will do more to boost output if required,” said David Scutt, a
trader at Arab Bank Australia.
Markets, however, will be looking at a raft of other Fed
speeches this week for any hint of more easing, which would
likely see the U.S. dollar fall to the benefit of risk
currencies.
However, should the Fed signal the bar for further
stimulatory policy remains very high, risk assets including the
Australian dollar, could be hit hard.
The Aussie was supported at $1.0320 after China
recorded a $5.35 billion trade surplus in March as import growth
eased back from a 13-month peak while exports grew faster than
expected, customs data showed on Tuesday.
But in spite of the data, it struggled to decisively pull
away from a three-month low of 1.0243 hit last week, weighed
down by soft local data, lingering fears about a hard landing in
China and expectations for a cut in domestic rates next month.
Markets have been concerned about a hard landing in China
and Monday’s high inflation reading of 3.6 percent certainly
dealt a blow to hopes for more stimulus from Beijing.
Australia is very sensitive to news out of China, its key
export market.
