FOREX-Yen selling pauses as markets look to U.S. jobs data

Fri Apr 5, 2013 7:51am EDT

Related Topics

* Yen recovers after big fall but selling expected to resume
    * Poor U.S. non-farm figures could weigh on dollar vs yen
    * But dollar still on track to rise towards 100 yen
    * German industrial orders rise more than forecast

    By Jessica Mortimer
    LONDON, April 5 (Reuters) - The yen recovered against the
dollar on Friday as investors took profit on a steep slide
prompted by a surprisingly radical monetary expansion drive from
the Bank of Japan.
    The market's focus shifted to U.S. jobs data due at 1230
GMT, which could weigh on the dollar if it is weaker than
forecast.
    But the dollar's gains against the yen were expected to
resume soon as the BOJ's aggressive monetary easing, unveiled on
Thursday, grinds down the yen in the weeks and months to come.
    The dollar extended Thursday's gains to hit a peak of
97.20 yen on trading platform EBS in Asian trade, a level not
seen since August 2009, but it then pared gains and was last
down 0.2 percent on the day at 96.08 yen.
    The dollar was still up nearly 11 percent against the yen so
far this year, with Thursday's BOJ decision causing the biggest
one-day fall in the Japanese currency since late 2008.
    "The moves yesterday were excessive ... so we are seeing a
pull-back and some profit taking," said Valentin Marinov, head
of European G10 FX strategy at Citi. 
    "That said, the trend in dollar/yen is on the upside. It
feels like investors will use dips to jump on the bandwagon of
the short yen trade before long."
    Traders were also wary the U.S. non-farm payrolls data could
be well below the consensus forecast for 200,000 jobs to be
created in March, especially after weak private payrolls figures
earlier this week. 
    "The market is expecting to be disappointed with U.S.
non-farms. A reading of 150,000 is probably where we at in terms
of expectations now - anything less than that is not factored in
and would send the dollar weaker," said Neil Jones, head of
hedge fund FX sales, at Mizuho Corporate Bank.
    But market participants expected the yen would soon resume
its falls against the dollar. 
    Aggressive monetary easing in Japan contrasts with
expectations that the U.S. Federal Reserve will reduce the size
of its asset purchases later this year, effectively tightening
policy as other major central banks look poised to ease.
    Mizuho's Jones said he had brought forward his forecast for
the dollar to reach 100 yen from June to the end of this month,
with a potential for it to firm towards 105 or 110 in the next
12 months.
    "Whereas before 100 in dollar/yen was seen as particularly
aggressive and somewhat wild it now seems relatively tame ... I
do think yesterday's BOJ was a game-changer."
    The BOJ's new governor, Haruhiko Kuroda, committed the
central bank to open-ended asset purchases as he promised to
inject about $1.4 trillion into the economy in less than two
years. 
    
    GERMAN ORDERS JUMP
    As the yen rebounded broadly the euro traded down
0.2 percent at 124.36 yen. It rose 4.3 percent on Thursday, its
biggest one-day gain against the yen since November 2008, and
then hit a peak around 125.61 yen in Asian trade on Friday.
    The euro was down 0.1 percent on the day at $1.2920 
but holding well above a 4-1/2-month low of $1.2740 on Thursday,
after data showed a bigger-than-expected jump in German
industrial orders. 
    The euro lost ground on Thursday after European Central Bank
chief Mario Draghi said the bank stood ready to act if growth
continued to languish and then recovered as he stressed that the
Cyprus bailout deal was not a template for future rescues.
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