FOREX-Yen under renewed pressure as gold jitters ease

* Yen down broadly as demand fades

* Steadier gold, after historic plunge, soothe jitters

By Masayuki Kitano and Ian Chua

SINGAPORE/SYDNEY, April 17 (Reuters) - The yen fell broadly on Wednesday, succumbing to renewed pressure after gold prices steadied somewhat from an eye-watering plunge earlier in the week.

The dollar was changing hands at about 98.14 yen, up 0.6 percent from late U.S. trade on Tuesday. It was still down about 1.8 percent from a four-year high of 99.95 yen set last week.

The euro climbed 0.6 percent to 129.29 yen, although it still remained some way off a three-year peak of 131.10 yen hit last week.

A historic plunge in gold prices on Monday, coupled with concerns about China's economic growth had sapped risk sentiment and given a lift to the yen earlier this week, reversing a tide of selling sparked by the Bank of Japan's aggressive stimulus programme.

"We still believe that the recent volatility in the commodity prices was mainly driven by long position liquidation, while the underlying backdrop remains risk-positive due to expanding global monetary easing," said Vassili Serebriakov, strategist at BNP Paribas.

"Overall, we expect the focus to gradually shift back to JPY which remains the key driver of FX markets. We see renewed USD/JPY gains driven by Japanese investor outflows, targeting USD/JPY at 105 by year-end."

A focal point is whether Japanese investors will eventually look overseas for higher returns as the Bank of Japan injects about $1.4 trillion into the economy in two years as part of a dramatic plan to jump start growth.

"We expect significant outflows of capital from Japan and increased use of the yen as a funding currency," said Mitul Kotecha, Hong Kong-based head of foreign exchange strategy for Credit Agricole.

"We're forecasting 104 for dollar/yen by the end of the year," he said.

G20 MEETING

In the near-term, the market will be focused on the Group of 20 meeting beginning on Thursday in Washington, where finance ministers and central bankers from the world's leading economies will discuss the economic and financial market outlook, including the Cyprus crisis and asset price reactions.

It seems unlikely that Japan will face any significant criticism over the Bank of Japan's aggressive monetary easing at the G20 meeting, said Credit Agriole's Kotecha.

"Although there may be some warnings about not focusing on exchange rate levels, etc. I don't think there is going to be anything categoric to put pressure on Japan to change its monetary policy," Kotecha said.

A senior Canadian financial official said on Tuesday that Canada was supportive of Japan's effort to kick-start its economy and that the G20 believed policy should target domestic economies and not exchange rates.

Separately, a U.S. official said on Tuesday that ways to boost global demand to help the faltering recovery will be a key focus for the United States at the G20 meeting.

Asked about competitive devaluations and the impact of Japan's aggressive monetary policy on the yen, the U.S. official said the United States will be watching closely to see how effective the policies are at boosting Japanese demand.

The euro held steady against the dollar at $1.3174, after having hit a seven-week high of $1.3202 on Tuesday, partly helped by its bounce versus the yen.

The single currency had added to its gains on Tuesday after breaching resistance at its 100-day moving average at roughly $1.3155, a level which could now act as support for the euro.

View the original article here

FOREX-Yen weakens, euro rallies as gold-induced worries ease

* Yen falls vs dollar, euro as G20 to meet later this week

* Euro climbs to seven-week high vs dollar, up 2 pct on yen

* Gold, stocks rebound from selloff, easing investor fears

By Daniel Bases and Wanfeng Zhou

NEW YORK, April 16 (Reuters) - The yen tumbled against the dollar and the euro on Tuesday, reversing the previous session's sharp gains as investor anxiety triggered by a record plunge in gold prices eased, denting demand for the safe-haven Japanese currency.

A drop in U.S. consumer prices and slippage of U.S. factory output strengthened the argument for the U.S. Federal Reserve to maintain its monetary stimulus in hopes of boosting the economy.

"The CPI data reinforces the view that the Fed is likely to engage in quantitative easing for some time," said Eric Viloria, senior currency strategist at Forex.com. "That is one of the reasons for support of the markets and sentiment in general. I think that is aiding the rebound here (in the yen) and why the U.S. dollar is weak."

Finance minister and central bankers from the world's leading economies will discuss economic and financial market outlooks, including the Cyprus crisis and asset price reactions, at the talks among the Group of 20 advanced and emerging economies beginning on Thursday in Washington.

The euro rallied to a seven-week high against the dollar, partly helped by its 2 percent jump against the yen. Investors shrugged off data showing a sharp fall in German investor sentiment in April.

A break of the euro above its 100-day moving average against the greenback around midday in New York spurred some blackbox algorithmic trading that further boosted the euro.

"A more significant signal is if we close above that level, and it looks like we might do that," said Viloria.

The euro rose 1.1 percent to $1.3184, with central bank buying reported. It hit a session peak of $1.3201, the strongest since Feb. 25, after breaking resistance around $1.3140/50. The next key level on traders' charts is in the $1.3270/1.3300 area.

REVERSAL

Gold rose on Tuesday, one day after a record-breaking drop sparked a broad selloff in commodities and equities alike. Monday's explosions in Boston added to the nervous tone in financial markets.

Two bombs ripped through the crowd at the finish line of the Boston Marathon on Monday afternoon, killing three people and maiming and injuring more than 100. President Barack Obama on Tuesday called the bombings an "act of terror."

"Yesterday there was a lot of fear in the market, especially as people were watching what's going on in gold," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. "There's a thought that maybe things were overdone in the yen cross."

But as gold and stock prices stabilized and investors concluded that the bombings may have been an isolated incident, they resumed buying higher-risk assets and selling the safe-haven yen.

A senior Canadian financial official said Canada was supportive of Japan's effort to kick-start its economy and that the G20 believed policy should target domestic economies and not exchange rates. The comments added to buying sentiment for the euro against the yen from oversold levels, analysts said.

The dollar peaked at 98.15 yen, according to Reuters data. It last traded up 0.83 percent to 97.55 yen.

A sharp rally in the dollar against the yen stalled in recent sessions as investors booked profits ahead of significant resistance and option barriers at the psychological 100-yen-per-dollar level. Analysts said, however, that the weakening yen trend remained intact after the Bank of Japan's aggressive monetary easing earlier this month.

"The fundamental picture still remains supportive of a weaker yen going forward as the recent rebound over the last couple of days is unlikely to prove sustainable," said Lee Hardman, currency economist at BTMU, which forecasts the dollar at 109 yen in 12 months.

Investors will also closely monitor gold prices, and another plunge could renew demand for the most liquid currencies such as the dollar and yen.

The euro rose 2 percent to 128.66 yen, having hit a session peak of 128.99 yen, according to Reuters data.

The Australian dollar rose 0.75 percent to $1.0389, while the New Zealand dollar gained 1 percent to $0.8497 . Both saw steep losses in the previous session.

View the original article here