* PBOC to up liquidity supply at an appropriate time-Xinhua
* Aussie hits session high on the report, retreats later
* Yen lower on toushin, importer-related flows
* Spanish key bond auction in focus
By Antoni Slodkowski
TOKYO, April 19 (Reuters) – The yen eased broadly on
Thursday after commodity currencies got a boost on hopes China
will soon ease policy, and as flows from Japanese importers and
‘toushin’ investment trusts pressured it against the U.S.
dollar, traders said.
The euro might come under fresh pressure and test its
long-standing support at $1.30 later in the session as
Spain tests investors’ confidence in its debt-laden economy when
it tries to sell new two- and 10-year bonds.
The dollar rose 0.3 percent to 81.50 yen, near its
highest level in about ten days, with traders citing flows
related to a launch of a large toushin in global REITs by a
Japan investment bank.
“The dollar was pushed towards 80 yen this week, but its
solid rebound well above 81 yen underscores its underlying
strength makes it hard for speculators to make any bets against
it,” said Bank of Tokyo-Mitsubishi UFJ analyst Teppei Ino.
The yen hovered right at the top of the Ichimoku cloud on
the daily charts, with traders citing stop losses above 81.60
and mild resistance at the 21-day moving average at 81.87. Key
resistance loomed at the Ichimoku kijun line at 82.24.
“Toushin-related inflows may also be a factor helping (the
dollar) r ise in the Asian session,” Ino said. Some traders also
cited dollar-buying into the local fix by Japanese importers
that helped support the greenback against the yen.
Tokyo importers’ purchases of fossil fuels have soared in
the wake of the Fukushima nuclear disaster in March 2011 as all
but one of the country’s 54 nuclear reactors have gone offline.
The Australian dollar gained 0.3 percent to 84.45 yen
, trading in the middle of the recent ranges against
the yen, helped by a broader jump in the Aussie on a China state
media report which at first raised hopes of an immediate cut to
banks’ reserve requirements.
But the full report by Xinhua merely said the Chinese
central bank had pledged to increase liquidity supply “at an
appropriate time”.
This saw the Aussie dollar jump about 0.3 percent to a
session high of $1.0388, before ceding some ground to
last trade slightly higher at $1.0362, still above its New York
close of $1.0348.
ALL EYES ON SPAIN
Trader attention turned firmly to the key Spanish bond
auction, which follows an abrupt relaxation of its deficit
targets earlier this month and comes amid mounting doubts about
the health of the country’s banking system.
Bank of Spain data showed on Wednesday how sliding home
prices and a looming recession adversely impacted the financial
sector, with Spanish banks’ bad loans rising to their highest
level since October 1994 in February.
Thursday’s auction comes after the 10-year bond yield jumped
above 6 percent earlier this week, fuelling worries over the
sustainablity of Spanish public finances.
“With central bank meetings and minutes out of the way, the
market direction will once again likely be steered by euro zone
peripheral stress. The big litmus test will be today’s Spain
bond auctions,” analysts at BNP Paribas wrote in a note.
The euro did not move a notch, standing firm at $1.3122
, having recovered from a dip to $1.3058. It looked well
supported around $1.3000, but could struggle above $1.3200 with
the April 12 high of $1.3213 likely to offer some resistance.
“A decent result, especially as liquidity improves following
Easter holidays, could be a swing factor,” they said.
The modest recovery in the euro saw the dollar index retreat
to 79.578 from Wednesday’s high of 79.861.
