* BOJ keeps policy unchanged, sounds upbeat on economy
* BOJ Governor Kuroda sees no immediate need to ease policy
* Euro supported by wait-and-watch stance by ECB
(adds fresh comments, details)
By Anirban Nag
LONDON, April 8 The yen rose on Tuesday, as some
investors trimmed bets against it after the Bank of Japan held
off from additional easing and Governor Haruhiko Kuroda offered
little indication that more stimulus was likely in the short
The dollar fell 0.5 percent to a 10-day low of 102.515 yen
while the euro shed 0.3 percent to 141.20 yen.
Also helped by subdued stock markets, with which it has an
inverse correlation, the yen had been inching up before the BOJ
It extended those gains after the BOJ kept policy unchanged,
and strengthened further after Kuroda sounded upbeat about the
economy and said both and inflation growth would pick up in
coming months despite a sales tax hike in April.
Many investors have been selling the yen in anticipation
that the sales tax hike will hurt consumption, and that the BoJ
may have to ease policy in coming months to soften the blow.
"Kuroda is signalling a 'steady-as-she-goes' hand as regards
to monetary policy which will disappoint some yen bears," said
Peter Kinsella, currency strategist at Commerzbank. "Unless
inflation falls sharply it doesn't look that they will ease."
The greenback has also struggled against the yen in recent
sessions after U.S. jobs data on Friday disappointed some
investors who have been betting on a faster recovery in the
world's largest economy. It has pulled back from a 10-week high
of 104.13 yen set on Friday.
The dollar's drop offered a good opportunity to investors to
initiate fresh bets in favour of the greenback and against the
yen, analysts said.
That is based on the view that monetary policy between the
Federal Reserve and the BoJ is increasingly diverging. The Fed
is tapering its bond-buying programme and many are also looking
for it to hike rates sometime in the middle of 2015.
"At 102.50 yen, dollar/yen looks attractive to go long,"
said Yujiro Gato, analyst at Nomura, London. "The downside for
dollar/yen is limited and at the end of the second quarter, we
could see it rise to 105 yen."
Besides monetary policy divergence between the BoJ and the
Fed, implied volatilies - a gauge of how choppy a currency will
be - have fallen too in the past few weeks.
Low volatility means a favourable
environment for carry trades, where investors borrow in a
low-yielding currency to invest in riskier assets. That hurts
the yen which is traditionally favoured in times of economic
uncertainty and financial market turmoil.
"The low volatility in FX markets generally should be mildly
supportive for carry trades and indirectly for dollar/yen," said
Callum Henderson, global head of FX research for Standard
Chartered Bank in Singapore.
That is likely to underpin higher-yielding, growth-linked
currencies such as the Australian dollar and New Zealand dollar
against the yen and keep the yen's gains in check against the
U.S. dollar, Henderson added.
The euro inched up against the dollar, to trade at $1.3770
, staying above a one-month low of $1.3672 set on Friday.
It gained after the European Central Bank policymakers again
played down the need for any immediate action.
Many, though, were wary of pushing it much higher.
"For the ECB, further appreciation of the euro is not
acceptable. Any move towards $1.40 will see a response," said
Bill O'Neill, head of the UK investment office at UBS Wealth
"Negative deposit rates will clearly have an impact on
weakening the euro. The Fed won't be enough to push the
euro/dollar decisively lower, you need some form of
accommodation from the ECB."
(Additional reporting by Masayuki Kitano and Natsuko Waki;
Editing by Catherine Evans)