* Apple results help risk appetite in Asia
* Aussie bounces back from 2-week low hit on CPI data
* Yen lower on easing safe-haven demand, importer selling
* Outcome of Fed meeting later on Wednesday awaited
* BOJ on Friday also in focus
By Antoni Slodkowski
TOKYO, April 25 (Reuters) – The euro hovered near a
three-week high against the dollar on Wednesday after euro zone
sovereign debt attracted decent demand and strong earnings from
Apple boosted risk appetite, while focus turned to the outcome
of a Federal Reserve meeting.
The euro traded at $1.3197, close to levels not seen
in three weeks, after hitting the previous session’s low of
1.3145. Immediate resistance is at last week’s high of 1.3225.
Investors were relieved when successful auctions sent yields
on Dutch, Spanish and Italian debt lower on Tuesday, a day after
the government in the Netherlands collapsed in a crisis over
budget cuts.
Traders cited stop losses at 1.3230 in the common currency,
while chartists suggested that if they get triggered, the euro
would target resistance at the 61.8 percent retracement of its
slide to 1.2995 from around 1.3386, coming in at 1.3236.
Whether these levels are tested largely depends on the Fed,
analysts said, which is expected to reiterate its intent to keep
benchmark U.S. interest rates near zero through 2014 when it
ends a two-day policy meeting on Wednesday.
“Ahead of the Fed FOMC outcome today, trading is likely to
be relatively restrained, with the risk rally struggling to make
much headway,” said Mitul Kotecha of Credit Agricole Corporate
and Investment Bank.
“Assuming that the Fed does not alter its policy setting but
instead only tinkers with its economic forecasts, the dollar
will escape any further selling pressure,” he said, adding he
did not expect the bank would mention loosening monetary policy.
Tentative improvement in risk appetite helped the dollar
climb against the safe-haven yen and bounce back from the
previous session’s trough of 80.86 yen to 81.43 yen, up
0.2 percent on the day.
Traders said the dollar was also supported by buying from
importers, with Japanese corporations preparing for a series of
holidays early next month known as Golden Week.
TAKING POSITIONS
Market players also positioned themselves ahead of a Bank of
Japan meeting on Friday, when it is expected to ramp up asset
purchases by up to 10 trillion yen ($123 billion) and in doing
so may extend the maturity of government bonds it targets to
around three years.
“Foreigners have scooped up the dollar on the dip last night
ahead of the BOJ decision on Friday. They, together with
importers, are keeping the yen under pressure,” said a senior
dealer for a major Japanese bank.
He added that unless the BOJ surprises the market, the
dollar would find it hard to further muscle in on the Japanese
currency.
“If anything some knee-jerk yen buying is expected after the
BOJ’s decision. We are still ahead of the Fed, which could of
course be a game changer, so many traders will take their final
positions going into the BOJ once the Fed is out of the way,” he
said.
Other risk-sensitive currencies, such as the Australian
and New Zealand dollars, held gains made in
early trade as Asian stocks rose taking heart from Apple Inc’s
results that beat Wall Street estimates.
The Aussie was barely changed at $1.0312, having
pulled away from a two-week trough at $1.0247 hit after low
inflation data the day before paved the way for a cut in
domestic rates in May.
Resistance is seen at the 200-hour moving average at $1.0346
and then a string of daily highs between 1.0385 and 1.0418,
suggesting any gains in the currency would likely be hard won.
The kiwi traded at $0.8115, with light profit-taking kicking
in after it staged a powerful comeback from Wednesday’s low of
0.8098.
