* Yen posts biggest one-day gain vs dollar since August
* BoJ keeps policy unchanged, sounds upbeat on economy
* BoJ Governor Kuroda sees no immediate need to ease policy
* Greenback weakens further in wake of March U.S. jobs data
(Adds quote, updates market prices)
By Richard Leong
NEW YORK, April 8 The yen rallied on Tuesday as
traders dialled back bets against the currency after the Bank of
Japan held off on additional monetary easing and BoJ Governor
Haruhiko Kuroda offered little indication more stimulus was
likely in the short term.
The Japanese currency posted its strongest one-day gain
against the U.S. dollar and its biggest single-day rise against
the euro in four weeks, according to Reuters data.
Many investors have been selling the yen, anticipating that
a sales tax hike that took effect in Japan at the start of April
will hurt consumption and the BoJ may have to ease policy in
coming months to soften the blow.
The BoJ decision to refrain from further monetary stimulus
was seen as supportive for the yen.
"You had a lot of players who were short the yen and Kuroda
dashed the hopes of stimulus," said Richard Scalone, co-head of
foreign exchange at TJM Brokerage in Chicago.
The dollar tumbled 1.4 percent to a three-week low of 101.56
yen before stabilizing at 101.69 in late trading.
The euro pierced below its 141 yen support to 140.09 yen,
its lowest in over a week. The euro zone single currency was
down nearly 1 percent at 140.28 yen in late trading.
The yen had been inching up before the BoJ policy decision.
It added to those gains after the BoJ kept policy unchanged, and
strengthened further after Kuroda sounded upbeat about the
economy and said both inflation and growth would pick up in
coming months despite the sales tax hike.
"Kuroda is signalling a 'steady-as-she-goes' hand as regards
to monetary policy which will disappoint some yen bears," said
Peter Kinsella, currency strategist at Commerzbank. "Unless
inflation falls sharply it doesn't look that they will ease."
The greenback has struggled against the yen in recent
sessions after Friday's March U.S. jobs data disappointed some
investors who had been betting on a faster recovery in the
world's largest economy. It has pulled back from a 10-week high
of 104.13 yen set on Friday.
The U.S. government said employers added 192,000 jobs last
month, below the 200,000 forecast by economists polled by
Reuters and far fewer than the 225,000 to 250,000 some traders
had hoped for.
"That has dealt a blow to the dollar bull story we had
earlier this year," Joe Manimbo, senior market analyst at
Western Union Business Solutions in Washington. "This doesn't
look so promising for the dollar going forward."
Other analysts, however, said the dollar's recent drop
offered opportunity for investors to initiate fresh bets in
favor of the greenback and against the yen.
That is based on the view that monetary policy between the
Federal Reserve and the BoJ is increasingly diverging. The Fed
is tapering its bond-buying program and many are also looking
for it to hike rates sometime in the middle of 2015.
"The downside for dollar/yen is limited and at the end of
the second quarter we could see it rise to 105 yen," said Yujiro
Gato, analyst at Nomura in London.
The dollar might weaken further against the euro as European
Central Bank policymakers continue to hold down expectations on
measures to avert deflation in the euro zone.
The euro got a brief boost against the greenback earlier
after the International Monetary Fund upgraded its outlook on
the euro zone economy from its forecast back in January while it
trimmed its view on the global economy.
The euro was up 0.4 percent against the dollar at $1.3796
after touching a near two-week high at $1.3811. It has
risen 0.7 percent since falling to a one-month low of $1.3672 on
Many, though, were wary of pushing the euro much higher as
further strength might lead the ECB to take action.
"For the ECB, further appreciation of the euro is not
acceptable. Any move towards $1.40 will see a response," said
Bill O'Neill, head of the UK investment office at UBS Wealth
Management in London.
(Additional reporting by Anirban Nag in London; Masayuki Kitano
and Natsuko Waki in Tokyo; Editing by Catherine Evans, Meredith
Mazzilli and James Dalgleish)