* Euro/dollar rises to highest since April 2012 on Draghi
* Yen weak after Abe pushes BOJ to ease policy
By Julie Haviv
NEW YORK, Jan 11 The euro skyrocketed to its
highest level against the dollar since April 2012 on Friday, a
day after European Central Bank Mario Draghi set a supportive
tone when he gave no indication the central bank would lower
Market participants had been wary that ECB President Mario
Draghi would signal rate cuts in the coming months, but he gave
no hint that the central bank was contemplating a rate cut any
time soon, a bullish signal for investors.
The euro's 0.6 percent gain added to the 1.6 percent advance
on Thursday, its biggest daily gain in five months.
. 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 and last traded at
$1.3346, up 0.6 percent on the day.
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.
"Altogether, the news from the past 24 to 48 hours has
mostly been negative for the greenback and positive for foreign
currencies," said Nick Bennenbroek, head of currency strategy at
Wells Fargo in New York.
"While it is possibly a mild surprise that the U.S. dollar
is not showing more consistent weakness, we suspect the
near-term direction remains lower for the greenback against most
foreign currencies," he said.
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,
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
89.18 yen, up 0.5 percent, according to Reuters data.
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.