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FOREX-Yen drops after G7, pauses before US retail sales data
May 13, 2013 / 11:56 AM / 5 years ago

FOREX-Yen drops after G7, pauses before US retail sales data

* Yen hits fresh lows versus dollar, euro after G7 meeting

* More gains depend on continued improvement in US economy

* U.S. April retail sales seen down 0.3 pct month-on-month

* Euro dips on ECB’s Visco comments, Aussie at 11-month low

By Jessica Mortimer

LONDON, May 13 (Reuters) - The yen fell further on Monday after Group of Seven finance officials held back from directly criticising Japan’s monetary policy, which has pushed the currency to a four-year low against a broadly firmer dollar.

The next pointer for markets will be U.S. retail sales data at 1230 GMT, which if strong could drive the dollar higher still.

The yen was last steady at 101.60 per dollar, having earlier dropped as low as 102.15 on trading platform EBS, its weakest since October 2008, as investors saw the outcome of the G7 meting as a signal to sell the currency.

Traders said investors took profit on dollar gains above 102 yen, and it may struggle in the short term before a reported options barrier at 102.50 yen. But most expect more yen falls, with many seeing a drop towards 105.

“Whether the dollar rises quickly to 104 or 105 yen will depend on U.S. data,” said Jane Foley, senior currency strategist at Rabobank.

“... We know there is fiscal consolidation in the U.S. and the possibility we will get some disappointing data. This could act as a restraint on dollar/yen.”

Economists polled by Reuters expect U.S. retail sales to have fallen 0.3 percent in April from March.

Aggressive monetary easing in Japan and concerns about the risk of negative deposit rates in the euro zone contrast with expectations the U.S. Federal Reserve may scale back its asset-buying monetary easing later this year.

The yen has lost 10 percent since Bank of Japan’s latest easing measures were announced on April 4.

“It is a one-way bet and every pullback (in dollar/yen) will be met by buying interest,” said Niels Christensen, currency strategist at Nordea in Copenhagen, adding the yen could fall to 105-110 per dollar in the next six months.

EURO, AUSSIE FALL

The euro was down 0.1 percent at $1.2985, pressured after European Central Bank policymaker Ignazio Visco said the central bank may opt for negative deposit rates.

In a Reuters poll conducted after Visco’s comments, 22 of 25 euro money market traders said they did not expect the ECB to cut the rate below zero - in line with findings of a wider poll of economists taken last week.

Against the yen, the euro was down 0.15 percent at 101.58 yen, off an earlier three-year high of 132.39.

Broad dollar gains, coupled with expectations of more interest rate cuts in Australia and concerns about slowing growth in China, pushed the Australian dollar down 0.6 percent to an 11-month low of $0.9954.

Against a currency basket, the dollar was steady at 83.123, near Friday’s six-week high of 83.438.

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