* Dollar and euro up more than 1 percent vs yen
* Yen falls as Amari says remarks misinterpreted
* Technical break of 90 yen could confirm bullish dollar
* Euro gains on strong Spanish debt sale and risk appetite
By Julie Haviv
NEW YORK, Jan 17 The yen plummeted against the
dollar and euro on Thursday as investors bet that the Bank of
Japan will soon embark on aggressive policy easing while the
euro thrived as strong sovereign bond auctions assuaged concerns
about the region's three-year-old debt crisis.
The dollar and euro gained significant value versus the yen
after sinking for two straight sessions, returning to a trend
that has been in place for several months based on expectations
that the BoJ will become more forceful in its actions to bolster
the beleaguered economy.
It has so far been a banner year for the greenback and euro
versus Japan's currency, notching a nearly 3.2 percent and
around a 4.4 percent gain, respectively. The impressive
appreciation follows dollar/yen and euro/yen gains of about 11.3
percent and roughly 14.3 percent in the fourth quarter.
The yen fell in Asian trade after Japan's Economics Minister
Akira Amari was quoted as saying his remarks on Tuesday about
the negative impact of excessive yen weakness had been
The dollar rose as high as 89.56 yen and last traded at
89.48, up 1.2 percent, marking the biggest rise since
February 2012. The price is also within striking distance of
Monday's 2-1/2-year high of 89.67 yen.
"With key potential resistance nearby, around the 90.00
level, a breakout above that level would confirm a continuation
of the strong bullish trend that has been in place for the past
four months since the 77.00 area low, and could move towards
further potential resistance to the upside around the 92.00
level," said James Chen, chief technical strategist at FX
Solutions in Saddle River, New Jersey.
"To the downside, the 88.00 level may continue to serve as
key potential support within the strong bullish trend," he said.
Strategists said that increasing bets on aggressive policy
easing by the Bank of Japan would continue to drag the yen lower
before policymakers meet on Jan. 21-22, when it is widely
expected to adopt a 2 percent inflation target and perhaps
extend the current asset purchase program.
But the yen could rebound if the Bank of Japan falls short
of matching market expectations for implementing a very loose
"There is a risk of a disappointment (from the Bank of
Japan), but the pattern is that every time there has been a
recovery in the yen it has been small and investors are quick to
put on new short yen positions," Nordea FX strategist Niels
"There seems to be a very firm belief this trend (of
dollar/yen rising) will continue."
The dollar pared gains against the yen after U.S. data
showed factory activity in the U.S. mid-Atlantic region
unexpectedly contracted in January.
An improved appetite for risk emerged after a solid bond
auction from debt-burdened Spain and after earlier U.S. data
reflected strength in the world's largest economy.
Groundbreaking to build new U.S. homes accelerated in
December to its fastest pace in over four years while the number
of Americans filing new claims for unemployment benefits tumbled
to a five-year low last week.
Spain's bond auction buoyed the euro, which last traded at
119.48 yen, up 1.8 percent on the day.
That brought it closer to a 20-month peak of 120.12 hit on
The euro is up 1.2 percent against the dollar so far in
2013, largely due to growing optimism about the euro zone after
surprisingly upbeat comments from European Central Bank
President Mario Draghi last Thursday.
The next important event for financial markets is Chinese
data on Friday. Should the world's second-largest economy show
strength, riskier currencies, such as the Australian dollar,
The euro last traded at $1.3354, up 0.5 percent on
the day, but below Monday's 11-month high of $1.3403, according
to Reuters data.