* Yen squeezes broadly higher after BOJ dismisses additional
* Dollar index falls to lowest in three weeks
* Aussie dollar hits fresh 2014 highs vs USD
By Ian Chua
SYDNEY, April 9 The dollar languished at
three-week lows against a basket of major currencies on
Wednesday, having broken decisively lower as the yen squeezed
higher and even the euro gained a tailwind.
Traders said the moves were sparked in part by comments from
the Bank of Japan on Tuesday that dismissed any need for
additional stimulus. Recent remarks from European Central Bank
officials have also suggested no urgency for any immediate
All that caught the market long of U.S. dollars and very
short of yen, knocking the dollar index down 0.6 percent
to a low of 79.762.
The dollar skidded more than 1 percent against the yen in
its biggest one-day fall in over seven months to 101.55.
It has since drifted back up to 101.91.
The euro climbed as far as $1.3812, pulling further
away from Friday's trough of $1.3672. Even the Australian dollar
broke through tough resistance at $0.9310 to reach
$0.9368, a high not seen since November.
The dollar also slid on a raft of emerging market currencies
where investors have been wagering massively on dollar strength
that has not materialised, forcing a bailout of long positions.
In contrast, the Japanese currency gained ground on the
euro, the Australian dollar and many other currencies as well as
investors rushed to cover bearish positions.
Bank of Japan Governor Haruhiko Kuroda said on Tuesday there
was no need for additional stimulus to escape years of
debilitating deflation. He also expressed confidence the world's
third-largest economy can ride out the impact of a sales tax
Dollar bulls will be left to rue the greenback's latest
setback given an absence of any major economic data out of Asia.
However, analysts at BNP Paribas believe the greenback could
still make a comeback soon.
"We expect the USD to regain its feet in the weeks ahead as
improving U.S. data puts renewed upside pressure on U.S.
yields," they wrote in a note to clients.
"We closed our USD/JPY long recommendation flat on Tuesday
as the pair fell through our trailing stop set at our entry
level. However, we think the pair is likely to hold above the
year's lows around 100.80 and expect the March lows around
101.20 to also provide good support."
On Thursday, Australia's employment report and China's trade
numbers will take centre stage in the local session.
(Editing by Richard Pullin)