* Dollar/yen hits highest level since August 2009
* Euro/dollar slips but clings to bulk of Thursday's gains
* ECB wrong foots euro bears with optimistic comments
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, March 8 The dollar surged to a
3-1/2-year high against the yen on Friday, with the near-term
focus on whether U.S. jobs data will fuel hopes for a further
recovery in the U.S. labour market.
The euro eased versus the dollar but clung to the bulk of
the gains made the previous day, when the European Central Bank
wrong-footed investors who had positioned for a more dovish
signal from ECB President Mario Draghi.
The yen remained under pressure as markets looked past the
Bank of Japan's steady policy decision on Thursday to its April
meeting, where new leaders are expected to take bolder action to
The dollar edge up 0.6 percent to 95.37 yen. The
greenback rose to as high as 95.45 yen earlier, its strongest
level versus the Japanese currency since August 2009.
The dollar's surge against the yen at this particular
juncture probably caught many market players off guard, said
Satoshi Okagawa, senior global markets analyst at Sumitomo
Mitsui Banking Corporation in Singapore.
"No one had thought such a move would occur before the jobs
data...It was sort of like a surprise attack," Okagawa said.
Traders said dollar buying by Japanese importers on Friday
helped add to the yen's weakness.
The focus now is on the U.S. jobs data due later on Friday.
Economists polled by Reuters expect the U.S. economy to
have created a net 160,000 jobs in February while the
unemployment rate remained at 7.9 percent.
"If the jobs data turns out to be good I think we will start
to see a 95 yen to 98 yen range," said Hiroshi Maeba, head of FX
trading Japan for UBS in Tokyo.
Market players expect the Bank of Japan to launch more
monetary stimulus at its next meeting on April 3-4, when
Haruhiko Kuroda, a vocal advocate of aggressive easing, is
expected to have taken over as governor.
The BOJ is scheduled to hold two policy meetings in April,
with the second one to be convened on April 26.
If the BOJ expands it monetary stimulus next month that
could lead to the dollar trading in the 95-98 yen area or even
open the way for a test of 100 yen, depending on how
aggressively the central bank eases, said Ronald Ip, Director of
Wealth Solutions Group for HSBC Global Markets.
The BOJ could consider options such as increasing asset
purchases under its existing asset buying programme, or
bringing forward the start date of its open-ended asset buying
scheme to around June from 2014, Ip said.
The central bank may also opt to start buying Japanese
government bonds with longer maturities than it currently does
under its existing asset buying programme, he said. The BOJ now
limits its buying of JGBs under that programme to those with
maturities of up to three years.
"If they are able to adopt these kinds of measures...then
dollar/yen will go a bit higher," Ip said. If the BOJ fails to
deliver in April, the dollar might fall back to around 90-92
yen, he added.
EURO SLIPS VS DOLLAR
The euro eased against the dollar but clung to the bulk of
the gains made on Thursday, when the euro climbed about 1
percent as euro bears covered short positions after the ECB
president gave no indication that the bank would cut interest
rates further in the euro zone.
Draghi on Thursday played down the threat of contagion to
other euro members stemming from a political stalemate in Italy.
He also sounded upbeat on the outlook, saying there are many
signs that market confidence in the euro area is returning.
The single currency slipped 0.1 percent to $1.3092.
Against the yen, the euro rose 0.5 percent to 124.88 yen
Sterling, which had gained a brief reprieve after the Bank
of England held fire on more economic stimulus on Thursday,
fell 0.2 percent to $1.4984. Sterling had hit a
2-1/2-year low of $1.4965 on Thursday ahead of the BoE decision.