* Dollar stalls near 100 yen due hefty offers at the big
* Fed minutes fan QE exit speculation, support dollar
* BOJ ultra-loose policy will keep yen weak
By Anirban Nag
LONDON, April 11 The dollar paused for breath on
Thursday before an expected assault on the 100 yen level with
expectations the Federal Reserve may slow its bond-buying adding
to the impetus towards dollar strength.
While the U.S. currency pulled back slightly from a
four-year against the yen struck on Wednesday, as investors took
profit after a 7 percent surge since the Bank of Japan unveiled
a $1.4 trillion stimulus plan last week, analysts said it was
only a matter of time before 100 yen was broken.
Expectations the Fed would cut back on its bond-buying
programme were reinforced by the minutes of the U.S. central
bank's March meeting.
That contrasted with the stance of BOJ Governor Haruhiko
Kuroda, who signalled he was ready to offer further stimulus or
maintain an ultra-easy policy beyond two years if it proved
difficult to meet the bank's 2-percent inflation target.
"The Fed minutes were a bit more hawkish than most were
expecting," said Peter Kinsella, currency strategist at
Commerzbank. "But the market has run a bit ahead of itself with
the yen weakness theme. Also, there are option barriers at 100
yen which will see the dollar grind higher rather than a quick
and sharp move up."
The dollar was down 0.15 percent on the day at 99.65 yen
, off a four-year high of 99.88 yen.
Traders cited hefty offers to sell dollars at 100 yen from
Japanese exporters. However, they added most investors were
looking to use dips to add to long dollar positions.
"There is quite a lot of profit-taking after a sharp rally.
But the dollar didn't fall much, which seems to me a hallmark of
the strength of this market," said a trader at a European bank.
A rise above 100 yen would take the U.S. currency to highs
not seen since mid-April 2009 and pave the way for a test of the
April 2009 peak of 101.45 yen.
Yen weakness is partly being driven by expectations the
BOJ's ultra-loose policy will drive Japanese investors to
riskier and higher-yielding foreign assets.
So far, there is little evidence of that happening. Data
from Japan's Ministry of Finance showed Japanese investors sold
a net 1.145 trillion yen ($11.5 billion) worth of foreign bonds
last week, the biggest selling in a year.
Many expect yield-hungry Japanese investors to buy U.S.
Treasuries in coming months, especially if expectations that the
Fed may withdraw some of its stimulus gather pace.
The Fed minutes, which officials said were inadvertently
released hours ahead of schedule, showed a few policymakers
expected to taper the pace of asset purchases by mid-year and
end them later this year. Several others expected to slow the
pace later and halt the quantitative easing programme by
While the minutes were described by some analysts as a bit
more hawkish than expected, others discounted them because they
did not reflect a dismal March payrolls report released after
The euro was up 0.1 percent against the dollar at $1.3080
, but well below Wednesday's one-month high of $1.3122.
The single currency fetched 130.38 yen,, having
touched a three-year high of 130.57 on Wedenesday.