* Dollar/yen reaches 99.90 yen in thin early Asia trade
* Option barriers still protecting 100 yen for now
* Aussie dollar stable after biggest weekly fall in nearly a
By Ian Chua
SYDNEY, April 22 The yen started the new week
under pressure, with the dollar just a whisker away from the
elusive 100 level, after the Group of 20 countries stopped short
of criticising Japan's reflationary policies that have
significantly weakened its currency.
The dollar climbed 0.3 percent from late New York levels to
99.83 yen, having risen as high as 99.90 in early Asian
trade on Monday.
It was within striking distance of a four-year high of 99.95
set on April 11 and the psychological 100 level, where option
barriers are said to be lined up. A break there could trigger
stop-loss buying and target 100.20/30, traders said.
Data last Friday showed currency speculators raised their
bets against the yen in the week ended April 16, while lifting
positions in favour of the U.S. dollar.
In a communique after a two-day meeting, the G20 simply said
it would be "mindful" of possible side effects from extended
periods of monetary stimulus, without singling out Japan as some
in the markets had feared.
Finance Minister Taro Aso said Japan's radical economic
policies have led to a cheaper yen but only as a by-product of
stimulus steps to pull the country out of deflation.
"The G20 reiterated the call to avoid competitive
devaluations of currencies and said monetary policy should be
aimed at domestic price stability," said Vassili Serebriakov,
strategist at BNP Paribas.
"This could be seen as a 'green light' for the BOJ that
should be easily able to justify current policy on the grounds
that it fights entrenched deflation."
Many market players expect the BOJ's massive bond buying to
force real-money Japanese investors such as life insurers to
shift more funds to higher-yielding foreign bonds but some
market players said there is room for disappointment.
"The market is getting slightly ahead of itself in terms of
anticipating the flows out of Japan," said Christopher Brandon,
managing director for Rhicon Currency Management, a
Singapore-based fund with about $350 million in assets under
"A move to say, sort of 105 or thereabouts (in the
dollar/yen) is very much on the cards... However, I think it
would probably entail a broader dollar appreciation across the
board to see dollar/yen go higher than that," he added.
The euro also rose against the yen, reaching 130.74
from around 129.98 late in New York on Friday. It was
nearing a three-year peak of 131.10 set earlier in the month.
Against the dollar, the euro ticked up slightly to $1.3078
after pulling back from a session high of $1.3130 on
Friday. The euro, which failed to break above $1.3200 recently,
has been stuck in a $1.3000/3200 range in the past week or so.
Political uncertainty in Italy had kept a lid on the euro but
the country's re-election of a president on Saturday has raised
the prospect of an end to the two months of political stalemate
that followed a general election.
The common currency had also been hamstrung by persistent
talk of an interest rate cut by the European Central Bank. ECB
Governing Council member Ewald Nowotny on Saturday said it was
too early to judge whether a cut is needed.
After a horror week for commodity currencies, the Australian
dollar last stood at $1.0304., up 0.2 percent on the
day but still not far off a one-month trough of $1.0268 plumbed
It skidded more than 2 percent last week, suffering its
biggest weekly decline in nearly a year, after disappointing
Chinese growth data and a rout in commodity prices led by gold
took a heavy toll on the currency.
Aussie dollar bears will be watching with interest HSBC's
early report on China's manufacturing activity for April due on
Tuesday as well as Australia's consumer inflation data on
Fresh signs of weakness in the Chinese economy, Australia's
single biggest export market, will no doubt fuel more selling in
the Aussie dollar.