* Yen plummets in early Asia before slightly paring losses
* Nikkei reports BOJ to begin buying longer-dated bonds this
* Further downside for yen expected, other crosses quiet
By Sophie Knight and Ian Chua
TOKYO/SYDNEY, April 8 The yen hit fresh lows
against a host of major currencies on Monday, resuming its slide
on reports the Bank of Japan would immediately begin buying
longer-dated bonds to underline its determination to beat
The U.S. dollar was at 98.33, having jumped more than
a full yen to 98.85 in early Asian trade, the highest since June
2009, as stop-loss selling amid thin market conditions
exaggerated the yen's slide.
The euro climbed as far as 128.32 yen, its highest
since January 2010, before pulling back to 127.78 yen, 0.8
percent up from late U.S. levels on Friday.
Traders say the move was triggered by a report in the Nikkei
business daily that the central bank would buy 1.2 trillion yen
($12.35 billion) of government bonds with a maturity of over
five years this week, showing a sense of urgency never before
seen in the BOJ.
Last week, the central bank promised to inject about $1.4
trillion into the economy in less than two years, a gamble that
sent bond yields plummeting as prices rose on the prospect of
massive purchases of debt by the BOJ.
"Foreign funds or speculators selling off yen has got the
dollar-yen to this level," said Makoto Noji, senior strategist
at SMBC Nikko Securities.
Noji said he sees the greenback hitting a peak against the
Japanese currency in April, but that risk-aversion due to more
lacklustre data from Europe or the U.S. may prove an obstacle to
further gains for the dollar.
For now, however, analysts assume that the flood of new
money from the BOJ will be partly used by Japanese investors to
buy higher yielding assets abroad, putting downward pressure on
"We have re-established a broad basket of JPY shorts in
light of last week's BOJ aggressive actions," wrote analysts
from JPMorgan in a client report.
"Radical monetary measures were needed to re-invigorate the
downtrend in the yen, and on this front the BOJ has over
JPMorgan had re-established long positions in USD/JPY and
also favoured the Australian dollar and Brazilian real as carry
trades against the yen.
"For now, barriers are seen as a magnet more than anything
else. The first logical resistance would be this morning's high
on the spike, then the 100 level and the 101.50," said Sue
Trinh, senior currency strategist at RBC in Hong Kong.
Analysts said the dollar-yen's tenkan line on its daily
Ichinoku chart crossed its longer-term average known as the
kijun line in what is usually a bearish signal, but it was a
false alarm. The two lines converge at 95.69 and are said to
provide underlying support.
Since the BOJ unleashed the world's most intense burst of
monetary stimulus last week, the yen has slumped more than 6
percent against both the dollar and euro.
"We expect further weakness ahead, given the bank's clear
commitment to achieve its 2 percent (inflation) target,"
analysts at Barclays Capital said, adding they see the U.S.
dollar rising to 103 yen in three months.
The Aussie was up 0.2 percent against the yen at 102.06 yen
after rallying to 102.32 yen, its highest since July
With the Japanese currency still firmly in focus, the other
major currencies took a backseat.
The euro was flat against the greenback at $1.2995,
hovering near a two-week high of $1.3040 set Friday after
weaker-than-expected employment growth cast a shadow on the U.S.
economic recovery picture.
With little economic data out on Monday, the downward
pressure on the yen is seen as likely continuing through the
day, though its momentum could drop on further signs that the
U.S. economic recovery is not as robust as hoped.
Disappointing U.S. nonfarm payroll data on Friday very
briefly dented the greenback's gains before being overwhelmed by
yen bears continuing to celebrate the BOJ's aggressive
"Getting to 100 yen against the dollar is just a matter of
time," said Etsuko Yamashita, chief economist at Sumitomo Mitsui