SYDNEY (Reuters) – The yen hovered just below a two-year peak against the euro early on Tuesday and was broadly firmer versus other major currencies as investors shed bearish positions overnight.
Analysts said the move was triggered by comments from Koichi Hamada, an economic adviser to Japan’s Prime Minister Shinzo Abe, which indicated that the yen was excessively weak against the dollar.
The dollar slid as far as 119.68 yen JPY=, having been as high as 120.845. It last stood at 120.06. The euro pulled back to a low of 126.505 yen EUR=, reaching levels not seen since June 2013. It has since drifted back to 126.98.
The yen’s rebound also came after the Bank of Japan on Monday signaled that the benefits of its stimulus program was broadening, dampening speculation of more easing in the near term.
Singapore’s central bank meets Tuesday amid much speculation it will ease policy for the second time this year, which could tend to support the U.S. dollar in Asia.
Investors also sold the euro against the dollar, knocking the common currency to a low near $1.0520 EUR=, not far from a 12-year trough of $1.0457 plumbed last month. The euro has fallen for six sessions straight.
Not helping the common currency, Greece was forced to deny a Financial Times report that Athens was preparing for a debt default if it did not reach a deal with its creditors by the end of the month.
Weakness in the euro helped lift the dollar index .DXY to a one-month high of 99.990. The index, however, failed to break above 100.000 as sterling rebounded from a five-year low of $1.4567 GBP=D4.
The pound last stood at $1.4670, having taken heart from an opinion poll that showed the ruling Conservative Party pulling ahead of the opposition Labour Party just three weeks before Britain’s May 7 general election.
There was nothing to turn around the fortunes of the Antipodean currencies, which fell sharply after disappointing Chinese trade figures on Monday renewed worries about slowing growth in their biggest export market.
The Aussie slid to $0.7553 AUD=D4, coming within a hair’s breath of a six-year trough of $0.7534 set early this month. Its kiwi peer fell 1 percent to $0.7455 NZD=D4, but was still some way off a four-year trough of $0.7177 plumbed in February.
The next major test for the Antipodean currencies will come on Wednesday, when China releases industrial output, retail sales and first quarter gross domestic product data.
Ahead of that, the market will take its cue from U.S. retail sales data due later in the day.
“U.S. retail sales will be critical for currencies. Given the recent negative trend, markets would react poorly if the 1.1 percent increase expected is missed,” analysts at ANZ wrote in a note to clients.
(Editing by Shri Navaratnam)
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