* Yen drifts off one-month high vs USD
* Euro & sterling pressured after more weak data
* Markets wary ahead of central bank meetings
By Ian Chua
SYDNEY, April 3 The yen retreated from a
one-month high against the dollar early in Asia on Wednesday,
while the euro was subdued in a market largely lacking
conviction as investors await policy decisions by the Bank of
Japan and European Central Bank.
Yen bears are worried the BOJ might not live up to
expectations as markets are already positioned for aggressive
stimulus measures. Euro bulls fear the ECB could surprise with
an interest rate cut as the economic outlook darkens.
The dollar was at 93.37 yen, having skidded to a
one-month low of 92.57 on Tuesday. It was still some way off a
3-1/2 year high of 96.71 set last month.
The euro bought 119.72 yen after drifting off a
trough of 119.15. It too remained some distance from its
February peak of 127.71.
"Much of the BOJ dovishness is already priced in and traders
remain wary of jumping into short yen positions at current
levels," said Vassili Serebriakov, strategist at BNP Paribas.
"Furthermore, the new fiscal year in Japan means that
Japanese corporates will open hedging books again. Accordingly,
we suspect there could be a deeper pullback in USD/JPY in the
Against the greenback, the common currency slipped back to
$1.2820 from a one-week high of $1.2878. This helped the
dollar index edge off a one-week low.
Tough talk from Japan's Prime Minister Shinzo Abe and BOJ
governor Haruhiko Kuroda about tackling deflation have set the
bar very high for any further surprises.
In contrast, the ECB is widely expected to hold off on an
interest rate cut for now, preferring to calm markets by
pledging to keep the banking system lubricated after Cyprus's
brush with financial meltdown.
The Bank of England is also likely to hold steady at its
policy meeting on Thursday but more action in the form of
renewed government bond-buying is expected soon.
The market has been giving sterling a wide berth and piled
pressure on the currency on Tuesday after data showed British
manufacturing activity shrank for a second consecutive month in
The pound dropped back towards $1.5100 from a high
of $1.5259, and it hit an all-time low against the kiwi dollar
With markets wary of the yen, euro and pound, investors
warmed to the New Zealand and Australian dollars, making them
among the best performers overnight.
The kiwi dollar was at $0.8417, having hit a
six-week high of $0.8446, while the Aussie dollar was at $1.0453
, edging ever closer to a two-month peak of $1.0497 set
late last month.
Australia's central bank, as widely expected, left interest
rates unchanged on Tuesday although it left the door open to
more easing if needed. Still, it sounded relaxed about the
economic outlook and appeared comfortable keeping rates steady.
Economic data in Asia on Wednesday include the HSBC services
PMI for China.