* Japan escapes direct criticism from G20
* Yen softer across the board, downtrend intact
* Markets waiting for clues to next BOJ governor
By Ian Chua
SYDNEY, Feb 18 The yen started a fresh week on
the backfoot after Japan escaped direct criticism from its G20
peers on its aggressive reflationary plans that have weakened
the currency and raised international complaints of competitive
The G20 declined to single out Tokyo but committed to
refrain from competitive devaluations and said monetary policy
would be directed only at price stability and growth. Japan said
this has given it a green light to pursue its policies
Traders also said this means the market will happily
continue selling the yen.
The dollar rose to 93.90 yen, having bounced smartly
from a low of 92.20 on Friday. It is within reach of a 33-month
peak around 94.47 set a week ago. The euro is at 125.35
, also not far from a 34-month high of 127.71 reached
early this month.
Yen bears had turned cautious last week, worried Japan would
be openly criticised for allowing the yen to weaken. In the week
ended Feb. 12, currency speculators cut bets against the yen,
although they remained bearish on the currency.
"A lightly more nuanced tone in the G20 communique should
reassure Japanese policymakers and the market by removing the
risk of Japan being labelled as a currency manipulator,"
analysts at Barclays Capital wrote in a client note.
They said the yen's medium-term downward trend is intact and
maintained their 12-month forecast of 100 for dollar/yen.
The market's focus is now on Prime Minister Shinzo Abe's
nominee for the next Bank of Japan governor. Abe is expected to
announce his choice in coming days.
Sources told Reuters that former top financial bureaucrat
Toshiro Muto is leading the field of candidates to become the
next central bank governor. It is expected that he would
intensify stimulus efforts to reflate the economy.
Also notable was sterling, which squeezed higher across the
board as some investors closed bearish positions even after a
Bank of England policymaker said the currency may need to weaken
further to rebalance Britain's economy.
The pound was at $1.5503, off a 6-1/2 month low
around $1.5462 set Friday. Against the Australian dollar, it
jumped to A$1.0569 from a six-month trough of
In contrast, traders said position adjustments saw commodity
currencies like the Australian dollar come under pressure. The
Aussie fell back below $1.0300, from a 1-1/2 week high
of $1.0375. It seemed to have carved out a new trading range
roughly between $1.0230/0380.
The euro, meanwhile, was little changed at $1.3351,
having found good support near $1.3310 on Friday. The low also
represented the 38.2 percent retracement level of its Nov-Feb
The single currency has fallen about 2.5 percent since
peaking at a 15-month high of $1.3711 on Feb 1 as worries about
the health of the euro zone economy weighed on sentiment. Last
week, data showed the region slipped into a deeper recession
than expected in the last three months of 2012.
With the G20 done and dusted, markets will again look to
economic data for trading cues. There is little in the way of
major data in Asia on Monday, apart from Thailand's
fourth-quarter growth numbers.