* Dollar could break 100-yen level this week -strategist
* Aussie boosted by Chinese imports surge
* European bond yields hit lows on speculation of investment
By Sophie Knight
TOKYO, April 10 The yen bobbed around a nearly
four-year low against the dollar on Wednesday, but the momentum
created by the Bank of Japan's ambitious monetary expansion
campaign was not quite enough to push it over the 100-yen level
The Aussie pared gains after chalking up a 2-1/2 month high
of $1.0518 on news Chinese imports surged 14.1 percent on the
year, well beyond market expectations, overtaking exports to
create a mild trade deficit. It was last up 0.1
percent at $1.0496.
The dollar was steady at 99.09 on trading platform
EBS, after rising as high as 99.67 yen on Tuesday, its strongest
level since May 2009.
Technical resistance lies at 99.73 yen, the 50 percent
retracement of the dollar's drop from its June 2007 high of
124.14 yen to its record low of 75.311 yen set in October 2011.
Traders said options barriers are thickening around the 100-yen
"Dollar/yen failed to make a run for 100 over the past 24
hours but this does not mean the currency pair will not try
again before the end of the week," said Kathy Lien, director at
BK Asset Management in New York.
"We believe that it will only be a matter of time before
this level is taken out," she said in a note to clients.
The dollar has jumped around 7 percent against the yen since
the BOJ said last Thursday that it will pump about $1.4 trillion
yen into the economy and double Japan's monetary base in two
years to defeat deflation.
The move was even bigger than yen bears had hoped for, and
prompted many strategists to rejig their forecasts in favour of
"The BOJ has shown a strong commitment, which lit a fire
under the dollar-yen's feet," said Kyosuke Suzuki, director of
forex at Societe Generale.
The euro was flat against the yen at 129.70 after
rallying around 4 percent since the BOJ announcement to 130.09
yen on EBS on Tuesday, its highest level since January 2010.
The common currency was also steady at $1.3075 after
hitting $1.3100 on Tuesday, its highest since March 15.
There have been murmurs that plummeting Japanese bond yields
have already sent Japanese investors in search of higher yields
overseas, helping push French, Dutch, Austrian and Belgian bond
yields to record lows.
However, many market participants were sceptical, given that
Japanese institutional investors are known for their
cautiousness, and said the flows were more likely driven by
speculators buying in anticipation of their arrival.
"There is a lot of talk about Japanese investors moving
abroad, but it's hard to see them heading for junk bonds from
the likes of Spain or Portugal. They're unlikely to buy Bunds
either as they don't offer any yield," said Suzuki of Societe
A safer bet might be in U.S. Treasuries, which will be in
spotlight later on Wednesday as investors look for hints of
whether the U.S. Federal Reserve will slow or halt its asset
buying stimulus as the minutes of its last policy meeting are
Although the stimulus is seen as negative for the dollar as
it is tantamount to printing money, market participants said an
end to quantitative easing could lead to disappointment.
"I think the prospect of an end to QE could turn sentiment
risk-off, which could lead to yen-buying, pressuring the
dollar-yen," said Kenichi Asada, forex manager at Trust and
Custody Services Bank.