* 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
(Updates market action, adds quote, changes byline, dateline,
By Richard Leong
NEW YORK, April 8 The yen strengthened on
Tuesday as traders dialed back bets against it after the Bank of
Japan held off on additional easing and Governor Haruhiko Kuroda
offered little indication more stimulus was likely in the short
Many investors have been selling the yen in anticipation a
sales tax hike that took effect in Japan at the start of April
will hurt consumption and the BoJ may have to ease policy in
coming months to soften the blow.
The BOJ decision to refrain from further monetary stimulus
was seen supportive for the yen.
"You had a lot of players who were short they yen and Kuroda
dashed the hopes of stimulus," said Richard Scalone, co-head of
foreign exchange at TJM Brokerage in Chicago.
The dollar fell 0.8 percent to a 10-day low of 102.23 yen
while the euro shed 0.5 percent to 141.01 yen,
the lowest in more than a week.
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 inflation and growth would pick up in
coming months despite the sales tax hike.
"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 struggled against the yen in recent
sessions after Friday's March U.S. jobs data 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 below-forecast 192,000 U.S. job gain last month stoked
buying of U.S. government debt, sending yields to one-week lows.
The 10-year Treasuries yield was last 2.706 percent,
flat on the day.
"The latter part of the dollar's weakness is because of
lower U.S. yields," TJM's Scalone said.
The dollar's recent drop offered opportunity for investors
to initiate fresh bets in favor 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 program 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 in London. "The downside for
dollar/yen is limited and at the end of the second quarter, we
could see it rise to 105 yen."
The euro rose 0.4 percent against the dollar at $1.3799
, staying above a one-month low of $1.3672 set on Friday.
It gained after European Central Bank policymakers continued to
hold down expectations on measures to avert deflation in the
Many, though, were wary of pushing the single currency much
higher as further strength might lead the ECB to take action.
"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
Management in London.
"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," he said.
(Additional reporting by Anirban Nag in London; Masayuki Kitano
and Natsuko Waki in Tokyo; Editing by Catherine Evans and