* Euro broadly higher after solid performance overnight
* ECB officials play down QE expectations
* Sterling consolidates after hitting 4-1/2 year high
* Asian session seen subdued with Japan shut for holiday
By Ian Chua
SYDNEY, April 29 The euro traded at multi-week
highs against the yen early on Tuesday and held firm against the
dollar following a surprisingly strong performance overnight as
expectations for additional stimulus from the European Central
The common currency reached a three-week peak of 142.18 yen
, before slipping a touch to 141.97 yen. Against the
Australian dollar, it hovered near a five-week high of A$1.4985
But further big gains are unlikely in Asia with a public
holiday in Japan set to dampen trade.
A source said ECB President Mario Draghi had told German
lawmakers the central bank was still a long way off from
implementing a bond-buying programme even in the face of
persistently low inflation.
Sounding a similar tune, ECB Vice President Vitor Constancio
told reporters in Frankfurt that April's inflation figures due
later this week should not alone trigger a policy change.
Still, traders said any downside surprise in the inflation
numbers will weigh on the euro, especially since the market is
positioning for a pick up in price pressure.
German inflation figures are due later on Tuesday, ahead of
the euro zone number on Wednesday.
"If the German price data fails to show any improvement, this
would immediately raise expectations for an ECB easing as soon
as May 8, and hurt the euro," analysts at BNP Paribas wrote in a
note to clients.
The euro was only a tad firmer on the dollar at $1.3852
after recoiling from a two-week high of $1.3880. That
helped the dollar index recover to 79.696 from a two-week
low of 79.548.
Traders said ongoing tensions in Ukraine were creating some
volatility in the currency market.
The United States on Monday slapped fresh sanctions on
Russian firms and government officials, while its European
allies are wrangling over how to follow suit without badly
hurting their own economies.
Sterling was also caught up in a choppy session. It reached
a fresh 4-1/2 year high of $1.6858 on the prospect of
M&A flows but relinquished most of the gains to last stand at
U.S. drugmaker Pfizer confirmed on Monday it wanted
to buy AstraZeneca in a deal that could value its
smaller British rival at more than $100 billion.
The dollar managed to gain a bit of ground on the yen as
U.S. Treasury yields edged up on the back of upbeat
U.S. housing numbers. It fetched 102.51 yen, up from
102.21 late on Friday.
Traders said investors were generally wary of taking
aggressive positions ahead of major events later this week.
Policy reviews by the Federal Reserve and Bank of Japan as
well as U.S. non-farm payrolls are likely to play a pivotal role
in shaping the market's short term outlook.
(Editing by Shri Navaratnam)