* Yen down broadly as demand fades
* Steadier gold, after historic plunge, soothe jitters
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, April 17 The yen fell broadly
on Wednesday, succumbing to renewed pressure after gold prices
steadied somewhat from an eye-watering plunge earlier in the
The dollar was changing hands at about 98.14 yen, up 0.6
percent from late U.S. trade on Tuesday. It was still down about
1.8 percent from a four-year high of 99.95 yen set last week.
The euro climbed 0.6 percent to 129.29 yen,
although it still remained some way off a three-year peak of
131.10 yen hit last week.
A historic plunge in gold prices on Monday, coupled with
concerns about China's economic growth had sapped risk sentiment
and given a lift to the yen earlier this week, reversing a tide
of selling sparked by the Bank of Japan's aggressive stimulus
"We still believe that the recent volatility in the
commodity prices was mainly driven by long position liquidation,
while the underlying backdrop remains risk-positive due to
expanding global monetary easing," said Vassili Serebriakov,
strategist at BNP Paribas.
"Overall, we expect the focus to gradually shift back to JPY
which remains the key driver of FX markets. We see renewed
USD/JPY gains driven by Japanese investor outflows, targeting
USD/JPY at 105 by year-end."
A focal point is whether Japanese investors will eventually
look overseas for higher returns as the Bank of Japan injects
about $1.4 trillion into the economy in two years as part of a
dramatic plan to jump start growth.
"We expect significant outflows of capital from Japan and
increased use of the yen as a funding currency," said Mitul
Kotecha, Hong Kong-based head of foreign exchange strategy for
"We're forecasting 104 for dollar/yen by the end of the
year," he said.
In the near-term, the market will be focused on the Group of
20 meeting beginning on Thursday in Washington, where finance
ministers and central bankers from the world's leading economies
will discuss the economic and financial market outlook,
including the Cyprus crisis and asset price reactions.
It seems unlikely that Japan will face any significant
criticism over the Bank of Japan's aggressive monetary easing at
the G20 meeting, said Credit Agriole's Kotecha.
"Although there may be some warnings about not focusing on
exchange rate levels, etc. I don't think there is going to be
anything categoric to put pressure on Japan to change its
monetary policy," Kotecha said.
A senior Canadian financial official said on Tuesday that
Canada was supportive of Japan's effort to kick-start its
economy and that the G20 believed policy should target domestic
economies and not exchange rates.
Separately, a U.S. official said on Tuesday that ways to
boost global demand to help the faltering recovery will be a key
focus for the United States at the G20 meeting.
Asked about competitive devaluations and the impact of
Japan's aggressive monetary policy on the yen, the U.S. official
said the United States will be watching closely to see how
effective the policies are at boosting Japanese demand.
The euro held steady against the dollar at $1.3174,
after having hit a seven-week high of $1.3202 on Tuesday, partly
helped by its bounce versus the yen.
The single currency had added to its gains on Tuesday after
breaching resistance at its 100-day moving average at roughly
$1.3155, a level which could now act as support for the euro.