FOREX-Euro near all-time high vs yen before ECB
TOKYO, April 12 (Reuters) - The euro hovered near an all-time high against the yen and a two-year peak against the dollar on Thursday as market players awaited clues from the European Central Bank on whether interest rates will be lifted further.
The ECB meets later in the day and is widely expected to keep rates on hold at 3.75 percent, but investors are looking for ECB President Jean-Claude Trichet to give some signal that rates will rise to 4.0 percent by June or possibly as soon as next month.
Currency strategists at Morgan Stanley said if Trichet opts to use the language of strong vigilance, "the case for an earlier May hike could also gain traction."
The ECB's steady rate increases have given the euro a boost and stand in contrast to expectations for the Federal Reserve to begin cutting rates later in the year and the Bank of Japan's pledge to keep any monetary policy tightening very gradual.
The dollar was little changed at 119.35 yen JPY=, just off a six-week high of 119.55 yen struck the previous session. The euro barely budged near 160.37 yen EURJPY=R after jumping to 160.43 yen on Wednesday, the highest since the single currency was introduced in 1999.
The euro was also flat near $1.3438 EUR= and holding just below the two-year peak of $1.3457 struck on Tuesday.
Investors shrugged off the minutes of the Fed's March policy meeting at which the central bank said more rate hikes may be needed to keep inflation contained, contrary to the market outlook for rate cuts from the current 5.25 percent.
The yen lost ground on Wednesday as well after the International Monetary Fund's chief economist said the fund supported Japan's loose monetary policy and didn't see any need for "heavy-handed intervention" to limit the carry trade.
The Japanese currency has taken a hit partly from carry trades as market players use the low-yielding currency as a cheap source of funds to buy higher-yielding currencies, driving the Australian and New Zealand dollars to decade highs versus the yen.
