* Dollar/yen advances toward psychological 100-yen mark
* G20 does not criticize Japan's radical easing policy
* Hedge fund FX Concepts sees strong yen in second quarter
* Euro eases toward bottom of recent range vs dollar
By Luciana Lopez and Toni Vorobyova
NEW YORK, April 22 The dollar slipped against
the yen on Monday but remained within a hair's breadth of the
key 100-yen level after major industrialized nations gave a
stamp of approval to Japan's massive monetary easing program,
which has eroded the currency.
Japanese officials said that the Group of 20 leading
economies accepted that the country's $1.4 trillion stimulus
program is aimed at conquering 15 years of deflation rather than
at weakening the yen.
In response, the dollar climbed as high as 99.88 yen,
according to Reuters data, within striking distance of a
four-year high of 99.94 set on April 11 and the 100 level, where
option barriers are said to be lined up. It last traded at 99.28
yen, down 0.2 percent on the day.
"The lack of pushback by the G20 effectively gives the BOJ
(Bank of Japan) room to ease further if needed and should keep
the yen biased broadly lower," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange, Inc, in Washington,
A break of 100 could trigger stop-loss buying, which could
take the pair up to 101.45 yen, an April 2009 high that could
act as near-term resistance. Reported large option expirations
at 100 yen will keep the currency pinned to that level.
But with the yen not hitting similar highs against other
currencies, such as the Canadian and Australian
dollars, the Japanese currency's weakness against the
dollar could be limited.
"I think if you saw the yen in as weak a state against the
crosses it might add a little confirmation, it would make people
a little more comfortable in selling the yen now against the
dollar and against a lot of currencies," said Robert Lynch, head
of currency strategy for the Americas at HSBC in New York.
A sharper slide in the yen would also require more
information on flows out of Japan, said Adam Cole, global head
of FX strategy at RBC Capital Markets, who sees the yen staying
at around the 100 mark a month from now.
"To make it (a break of 100) sustainable, you need to see
strong evidence that Japanese investors are buying rather than
selling overseas assets, or you need to see a shift in hedging
behavior ... But at the moment we don't see that from capital
One-month implied volatility on dollar/yen jumped as high as
14.415, a level not seen in two years, underscoring
increased demand for options to protect against yen weakness.
Data on Friday showed currency speculators raised their bets
against the yen in the week ended April 16, while lifting
positions in favor of the U.S. dollar.
The yen has weakened 23 percent against the dollar since
mid-November, when Shinzo Abe, who became prime minister in
December, promised bold, expansionary monetary and fiscal
policies during his election campaign.
In the near term some investors expect the yen to gain
against the dollar.
Worries about the global economy will boost the yen against
the dollar in the coming months despite Japan's aggressive
stimulus program, John Taylor, chairman of FX Concepts, one of
the largest currency hedge funds, said on Monday.
"We're forecasting that the yen is going to be strong
between now and July," Taylor said at the Reuters FX Summit. "I
think in the next quarter, we'll trade between 92 and 102, and
I'd be more inclined to think 92."
From a fundamental point of view, the euro has been
hamstrung by persistent talk of an interest rate cut by the
European Central Bank.
The euro "is moving towards 1.30 this morning because more
European Central Bank officials sound like they support the idea
of a rate cut or some form of additional easing from the central
bank," said Kathy Lien, managing director at BK Asset
Management in New York.
That makes this week's euro zone PMI and German IFO reports
key, Lien added.
Even the re-election of Italy's president for a second term
offered little support to the single currency, analysts said.
"Quite frankly, I don't think removing this uncertainty from
the equation will necessarily translate into a euro positive ...
as it means that there's yet to be resolution to the hung
parliament," said Christopher Vecchio, currency analyst at
The euro remained vulnerable against the dollar on central
bank expectations. The euro last traded at $1.3058, up
0.1 percent on the day, according to Reuters data.