* Euro/dollar rises to highest since April 2012 on Draghi
* Yen weak after Abe pushes BOJ to ease policy
NEW YORK Jan 11 The euro on Friday climbed to
its highest against the dollar since April 2012 as investors
continued to trade on the absence of any hints as to future euro
zone interest rate cuts from European Central Bank President
Mario Draghi on Thursday.
The euro's 0.7 percent gain on Friday added to the 1.6
percent advance on Thursday, its biggest daily gain in five
months, after Draghi squashed expectations that the ECB may
prepare the groundwork for rate cuts in the near term.
. Draghi spoke after the ECB left its benchmark
rate unchanged at 0.75 percent.
While U.S. data had marginal impact on trading it did not
hinder appetite for risk.
"The shift in rhetoric by ECB President Mario Draghi from
'this is a financial crisis' to now 'this is an economic growth
crisis' signals what could be a shift in policy making," said
Christopher Vecchio, Currency Analyst at DailyFX. "Indeed, with
no governments requesting a rate cut, a period of calm has
descended on Europe."
The euro rose as high as $1.3365, using Reuters data,
and last traded at $1.3351. Some US$5.1 billion in euros changed
hands using Reuters Dealing data through the global session
The euro's ascent helped it to its highest since December
2011 against the Swiss franc.
The euro also rose as high as 119.32 yen touching
its highest level since May 2011.
The U.S. trade deficit unexpectedly grew in November,
exerting a drag on economic growth, although the gap's widening
was driven by a surge in consumer goods imports, which gives a
positive signal for consumer spending.
"The month-to-month gyrations in the trade balance are
beside the economic point," said Joseph Trevisani, chief market
strategist at WorldWideMarkets, Woodcliff Lake in New Jersey.
"The trend and any potential improvement in the trade deficit
depend on the American consumer and the price of oil. Neither
shows any sign of moderation."
The market's focus, with the ECB meeting concluded, remains
the yen as investors continued to debate whether the advance in
the U.S. currency to a 2-1/2-year high was too far, too fast
given the outlook for further easing by the Bank of Japan.
Analysts said such dips in dollar/yen were only temporary,
with the overall trend of yen weakness intact. Some expect to
see the dollar well above 90 yen in coming months.
The dollar had risen as high as 89.44 yen earlier on Friday,
according to Reuters data, its strongest since June 2010, after
Japanese Prime Minister Shinzo Abe's government approved a $117
billion fiscal stimulus package, its largest since the financial
crisis. It was last at 89.12 yen, up 0.4 percent.
Abe also said the Bank of Japan should consider adding
employment to its existing mandate of price stability.
Ian Stannard, head of European FX strategy at Morgan Stanley
in London said the pullbacks in dollar/yen have been very
shallow and this underlines the strength of this trend.
"The pace of increase not just (in dollar/yen) but also the
pace of policy reforms in Japan is exceeding market
expectations," said Stannard.
"As a result we have raised our forecast even further ...
looking for dollar/yen to move towards the 95 level by the end
of this quarter."
The yen has been sinking since November on speculation the
BOJ could ease policy further. Analysts expect the BOJ to adopt
an explicit 2 percent inflation target at its policy meeting on
Jan. 21-22, to fall in line with the aims of the government.
Against the yen, the dollar has risen around 1.1 percent
this week, while the euro has risen around 2.2 percent. Analysts
said the current weakness in the yen is likely to persist.