* Yen hits fresh 4-year low vs euro, 6-month low vs dollar
* German inflation eyed for clues on euro
* Trading light with U.S. markets shut for Thanksgiving
By Anirban Nag
LONDON, Nov 28 The yen struggled near lows
against the euro and the dollar on Thursday, and was on track
for one of its worst monthly performances this year as investors
sold the low-yielding currency to buy higher-yielding assets.
The greater appetite for risk drove the MSCI World equity
index close to its October 2007 record high, and
Japan's Nikkei hit its highest close in nearly six years
while Germany's DAX hit a new peak.
All this kept the yen, currently the most commonly used
funding currency for Japanese and overseas investors seeking
higher returns in assets such as stocks, under pressure.
Activity was relatively thin with U.S. financial markets
shut for Thursday's Thanksgiving holiday.
The euro rose 0.3 percent, to 139.15 yen, just
shy of its June 2009 high of 139.26 yen. A move above that level
would take the euro to its highest in five years.
"The latest yen move is led as much by euro/yen as by
dollar/yen and has further to go. Bond outflows from Japan are
picking up and though this doesn't correlate particularly well
with anything the yen does, I think dollar/yen is on its way to
110," said Kit Juckes, currency strategist at Societe Generale.
The dollar was slightly higher at 102.20 yen, pinned
near six-month highs of 102.28 yen struck earlier in the day.
With government debt yields anchored by the Bank of Japan's
massive bond-buying programme, Japanese investors have been
seeking higher returns abroad. They amassed nearly $14 billion
in foreign bonds last week in their seventh straight week of net
buying - the longest such run in a year.
Many investors expect the yield differential between U.S.
Treasuries and JGBs to widen, though the impact of foreign bond
buying on foreign exchange markets is limited if investors hedge
their bond purchases.
Overall, though, the dollar underperformed on lingering
doubts over whether the Federal Reserve will start withdrawing
monetary policy stimulus in the near term. The dollar index was
down 0.2 percent at 80.567.
"As long as the dollar remains week and draws little support
from Fed policy, we will see the euro push higher," said Neil
Mellor, currency strategist at BNY Mellon. "That will be
unhelpful for euro zone exporters."
Against the dollar, the euro traded at $1.3605, very
close to a one-month high of $1.3613 struck on Wednesday.
Investors will await German November inflation due later in
the day, before Friday's euro zone 'flash' consumer price data.
Last month a surprise drop in German inflation drove the broader
euro zone consumer price index lower, triggering a European
Central Bank interest rate cut.