* Yen hits fresh four-year lows vs dollar, 3-yr on euro
* USD/JPY eyes 100, a level not seen since mid-April 2009
* China inflation data next in focus
By Ian Chua
SYDNEY, April 9 The yen pushed deeper into
multi-year lows versus the dollar and euro on Tuesday as the
market saw every reason to sell the currency with the Japanese
central bank on a warpath to battle deflation.
The dollar advanced to 99.60 yen, having reached a
fresh four-year high around 99.65 and just a whisker from the
psychological 100 barrier. The euro bought 129.69 yen
, a peak not seen since January 2010.
Since the Bank of Japan (BOJ) unveiled a massive stimulus
programme last Thursday, and swiftly followed up by buying
longer-dated bonds on Monday, the yen has skidded around 8
percent versus the dollar and euro.
"For USD/JPY, upside momentum remains strong and an eventual
test of 100.00 seems in the cards, though there are likely to be
a number of barriers between 99.50 and 100.00," said Vassili
Serebriakov, strategist at BNP Paribas.
"Markets are increasingly focussed on the notion that larger
JGB purchases at longer maturities by the BOJ could push
Japanese domestic long-term investors elsewhere."
JPMorgan noted Japanese households hold 55 percent of their
financial assets of 833 trillion yen in deposits and cash,
compared to 14 percent in the United States and 36 percent in
the euro zone. Japanese life companies also hold 140 trillion
yen in JGBs.
Even the thought that some of this cash may flow abroad is
lowering yields across the globe and pushing down the yen.
Commodity currencies posted hefty gains versus the yen. The
Australian and New Zealand dollars soared to five-year highs of
103.70 and 84.32 respectively.
With the 'sell-yen' trade dominating the market, other major
currencies found themselves stuck in a holding pattern.
The euro was at $1.3019, continuing to hold near
$1.3000 since recovering from a four-month trough of $1.2740
plumbed last week.
The Australian dollar drifted back above $1.0400 after a
brief dip to $1.0348. But Aussie-dollar bulls remain wary after
two attempts to break above $1.0500 in the past few weeks ended
Sterling struggled on prospects of further easing from the
Bank of England. The pound retreated to $1.5259 after a
bounce to a six-week high of $1.5364 on Friday fizzled out.
Chinese inflation data due around 0030 GMT will offer the
market a distraction from the unrelenting focus on the BOJ.
China's annual rate of consumer inflation is expected to ease to
2.4 percent, from a 10-month high of 3.2 percent.
Such an outcome will be welcomed by markets as it reduces
the urgency for policymakers to begin tightening monetary
conditions early in China's recovery cycle.