May 10, 2013 / 12:11 PM / 4 years ago

FOREX-Yen slides to 4-1/2 year low versus buoyant dollar

* Dollar jumps to well above 101 yen, some say 105 possible

* Traders report options barrier at 102 yen

* Euro hits more than 3-year high versus yen

* Aussie falls below parity to 10-mth low, Swiss franc falls

By Jessica Mortimer

LONDON, May 10 (Reuters) - The yen slid to its lowest since October 2008 against the dollar on Friday on signs Japanese investors were buying more foreign assets and as U.S. data sparked talk the Federal Reserve may scale back monetary easing.

The yen fell 1 percent to hit a four-and-a-half year low of 101.74 yen per U.S. dollar on EBS trading platform.

Traders said the yen extended falls after breaking through a reported options barrier at 101.50 yen and as stop-loss dollar buy orders were triggered above 101.55 and 101.60 yen. Another options barrier was said to lurk at 102.00 yen.

After the dollar's jump beyond the psychologically and technically significant 100 yen level, which has formed stiff resistance in recent weeks, traders and analysts predict more yen falls to come, possibly towards 105 yen per dollar.

The yen has lost nearly 9 percent against the U.S. currency since the Bank of Japan announced aggressive monetary easing on April 4 and is down 15 percent so far this year.

"I do see dollar/yen moving higher," said Steve Barrow, head of G10 currency research at Standard Bank, who predicts the dollar will rise to 110 yen in 12 months.

But he expected the move to be "relatively slow" from here until the Federal Reserve started to taper its quantitative easing programme or Japanese inflation rose significantly.

The dollar rose after U.S. weekly jobless claims pointed to a better U.S. outlook and Fed officials renewed a debate on scaling back asset buying.

Yen falls then accelerated after data suggesting the BOJ's radical easing policies were pushing Japanese investors to seek higher yields abroad.

"The bigger move is one of broad dollar strength on the back of heightened expectations that the Fed could taper its asset purchasing programme before year-end," said Lee Hardman, currency economist at BTMU, adding there was little chart resistance until 105 yen.

Analysts at UBS raised their one- and three-month forecasts to 102 and 105 yen respectively, both from 95 yen previously.

G7 officials were expected to reiterate that monetary policy tools aimed at boosting a domestic economy were acceptable even if they weakened a currency. Analysts said that could be seen as a green light to further yen selling.

But Fed Chairman Ben Bernanke may still leave the door open to more bond buying in a speech at 1330 GMT.

The euro hit a three-year high of 132.26 yen, but lost 0.3 percent against the dollar to $1.2993. The dollar hit a two-week high against a basket of currencies of 83.098.


The Australian dollar dropped below parity against the U.S. dollar to hit a 10-month low of $0.9997. The currency has fallen recently on concerns about a slowdown in China and the prospect of more rate cuts in Australia.

The yen's steep drop encouraged broad selling of safe-haven currencies, pushing down the Swiss franc.

The dollar hit a six-week high of 0.95895 Swiss francs on EBS and the euro a 3 1/2-month peak of 1.2463 francs.

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