* ECB’s Coeure says bond-buying programme still an option
* Euro resilient vs dollar, faces tough chart choices on yen
* Australia’s jobs report fuels jump in Aussie
* But rate cut by RBA in May still not off the table
* Italian debt auction next focal point
By Antoni Slodkowski
TOKYO, April 12 (Reuters) – The safe-haven yen pulled away
from multi-week peaks against major currencies on Thursday after
the European Central Bank official hinted at the possibility of
more bond-buying, but an upcoming Italian debt sale posed more
risks to jittery markets.
The Australian dollar shot up more than half a percent
against the dollar and the yen after unexpectedly strong local
employment figures eased worries the Australian economy could
suffer from slower global growth.
Traders took profits on the Japanese unit which gained the
previous session as riskier assets remained pressured with the
euro zone debt woes back in focus and Spanish bond yields still
close to a four-month high and the crucial six percent level.
The yen eased 0.1 percent helping the dollar climb back to
80.90 yen, up from a six-week low at 80.57, while the
euro rose to 106.30 yen from Wednesday’s trough of
105.45. The yen was sold by model and macro funds, traders said.
“Some players have bought the yen back on resurfacing euro
worries, but this is likely to be nothing more than a correction
to the broader weak yen trend,” said Teppei Ino, a currency
strategist at Bank of Tokyo-Mitsubishi UFJ in Tokyo.
“While against the euro, the yen may still have some more
space to strengthen, the stop in the fall in 10-year Treasury
yields around two percent could serve as a signal to slowly buy
the dollar back,” he said.
Euro/yen was poised to make a decisive move on the charts,
trapped above support at the 200-day moving average at 105.86
yen and resistance at the top of the Ichimoku cloud at 106.29,
with 55-day moving average at 106.41 posing more resistance.
Giving some respite to riskier assets, ECB Executive Board
member Benoit Coeure said the scale of market pressure on Spain
is not justified and the ECB still has its bond-buying programme
as an option.
“A suggestion by an ECB board member that they could
reactivate the SMP (Securities Markets Programme) facility
helped to bring calm to a feverish Spanish bond market,” said
Sebastien Galy, strategist at Societe General.
“The relief could be felt more globally, but it was limited
in scope indicating that we remain in a roller coaster and are
not at the end of it yet.”
Another test for the currency comes later in the day as
Italian three-year borrowing costs are set to jump by a
percentage point from a month ago at a bond auction, the latest
sign investors’ concerns about Spain are spreading to other euro
zone countries hit by recession.
Still, with the dollar funding rates in Europe stable, the
euro has been resilient, reaching a one-week high of $1.3158
, before retreating to $1.3136. That kept it well within
the $1.3030-$1.3165 range trodden in the past week.
SURGING PAST EXPECTATIONS
The Aussie rose to as high as $1.0373 from around
$1.0305, hitting its highest level in more than a week after
Australian employment surged past all expectations in March
while the jobless rate stayed at a low 5.2
percent.
Mounting expectations of an interest rate cut next month and
fears about a hard economic landing in China, Australia’s single
biggest export market, have conspired to drag the Aussie 3.7
percent below this year’s peak of $1.0857 hit in late February.
“Certainly a surprisingly strong number which does contrast
with anecdotal evidence and poor consumer sentiment,” said Amee
Kaye, an economist at Macquarie.
“However, we don’t think it changes the equation for a rate
cut in May. The Reserve Bank has seen something that made it
worried about growth being below trend and put the onus on
inflation for an easing,” said Kaye.
Markets are keeping an eye on the Federal Reserve’s
second-in-charge Janet Yellen, due to speak about “The Economic
Outlook and Monetary Policy” at a dinner in New York at 2315
GMT.
