April 10, 2013 / 6:16 PM / 5 years ago

FOREX-Dollar leaps to 4-yr high, close to striking 100 yen mark

* Policymakers considered ending bond-buys this year -Fed
minutes
    * Euro briefly supported by talk of Japanese portfolio flows
    * U.S. stocks trade at highest on record

    By Julie Haviv
    NEW YORK, April 10 (Reuters) - The dollar skyrocketed to its
latest four-year high against the yen on Wednesday, trading
close to the key 100 yen mark after minutes of the Federal
Reserve's March meeting raised expectations it will finish its
bond-buying spree by the end of the year.
    The  U.S. central bank's stance starkly contrasts with
aggressive monetary easing steps from the Bank of Japan, which
last week pledged to pump about $1.4 trillion into the economy
in less than two years in a bid to beat decades-long deflation.
    A few Fed policymakers expected to taper the pace of asset
purchases by mid-year and end them later this year, while
several others expected to slow the pace a bit later and halt
the quantitative easing program by year-end, according to the
Fed minutes, which were released hours ahead of
schedule. 
    "Once again, the minutes have sounded a slightly more
hawkish tone and that's really what's benefiting dollar/yen,"
said Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington.
    After breaking technical resistance at 99.73 yen, the 50
percent retracement of the dollar's drop from its June 2007 high
of 124.14 yen to a record low of 75.311 yen set in October 2011,
the dollar rose to a session high of 99.81 yen, its
highest since April 2009.
    The dollar last traded at 99.70 yen, up 0.7  percent on the
day, according to Reuters data.
    The yen temporarily recouped most losses after BoJ Governor
Haruhiko Kuroda said the bank took all necessary steps for now,
but the bounce was short-lived.
    Kuroda also said the bank was resolved to keep printing
money for as long as needed to achieve 2 percent inflation,
signaling his readiness to offer further stimulus or maintain an
ultra-easy policy beyond two years if meeting the target by then
proves difficult. 
    "He is saying 'for now' that tells me he will opt for
further easing in the future," said Neil Jones, head of hedge
fund FX sales, at Mizuho Corporate Bank in London. Jones said
the BOJ's attempt to reach 2 percent inflation would imply
dollar/yen trading at 110.00.
    Traders said hefty options barriers around 100 yen could
slow the dollar's rise, but an eventual break above that level
looked inevitable.
    "Around 100, people have a lot of barriers they try to
defend by selling. It makes sense we have stalled but we are
going to go through that level, it's just a matter of time,"
said Geoff Kendrick, currency strategist at Nomura.
    The euro last traded 0.5 percent higher at 130.18 yen
, having risen as high as 130.50 yen on Reuters data,
the strongest since January 2010.
    Against the dollar, the euro was at $1.3058, down 0.2
percent on the day, as investors opted to book profits after it
earlier hit a one-month peak of $1.3121.
    In recent days, the euro has been partly supported by market
speculation that Japanese investors looking for higher returns
may opt for euro zone assets.
    Expectations of Japanese buying have pushed French, Dutch,
Belgian and Austrian bond yields to record lows in the wake of
Japan's aggressive monetary-easing policy decision.
    Chinese import data buoyed the Australian dollar while stock
markets around the world rallied with the S&P 500 
breaking its previous all-time intraday high set on Oct. 11,
2007. The Dow also yet another intraday milestone, also
rising to an all-time high.

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