FOREX-Yen gains broadly after BOJ easing move disappoints

* Dollar/yen trades below 85, not far from 15-year low

* BOJ expands fixed rate fund supply program

* Euro falls versus dollar as stocks decline
(Updates prices, adds comment)

By Wanfeng Zhou

NEW YORK, Aug 30 (BestGrowthStock) – The yen rose broadly on Monday
after the Bank of Japan’s decision to expand cheap loans to
banks disappointed investors who had looked for more aggressive
measures to curb the yen’s strength.

The dollar fell below 85 yen and the euro lost more than 1
percent against the Japanese currency after the BOJ beefed up
the supply of fixed-rate loans to banks to 30 trillion yen
($351 billion) from 20 trillion yen.

Investors saw the central bank’s moves as a symbolic
gesture that will do little to halt the currency’s climb,
putting the onus on the Japanese government to act if the yen
continues to rally. [ID:nTOE67S01V]

“The market was underwhelmed,” said Marc Chandler, global
head of currency strategy at Brown Brothers Harriman in New
York. “Japanese officials continued to struggle to get ahead of
the curve of expectations.”

In midday trading, the dollar fell 0.5 percent to 84.74 yen
(JPY=: ) ,down from the day’s high above 85.90 hit before the BOJ
announcement. The dollar earlier hit a session low of 84.56
yen, according to Reuters data, not far from its 15-year low of
83.58 yen set on electronic trading platform EBS last week.

Adding to strength in the yen were comments from Bank of
Japan Governor Masaaki Shirakawa, who said after meeting with
Prime Minister Naoto Kan that Kan had not made any requests on
the central bank’s monetary policy. Shirakawa refused to
comment on recent currency moves.

Earlier in the day, Shirakawa said policy steps will not be
bound by moves in the yen and stocks and that the rise in the
yen was down to investor aversion to risk. [ID:nTKZ006509]

The BOJ’s move and the official comments encouraged
investors to add to long yen positions on speculation currency
intervention by Japan was not imminent.

A trader said stop-loss orders to sell the dollar under
84.90 yen helped accelerate the pair’s slide. Support comes in
at around 84.50, while resistance is at 86 yen.

The euro (EURJPY=R: ) fell 1.1 percent to 107.51 yen.

LONG YEN POSITIONS INCREASE

Data from the Commodity Futures Trading Commission showed
investors increased long positions in the yen and the Swiss
franc in the week to Aug. 24 as worries about a slowing global
economy drove investors to perceived safe-haven currencies.
[IMM/FX]

Analysts expect the yen to rise further against the dollar
if expectations mount that the U.S. Federal Reserve will act to
spur growth, moving more aggressively than the BOJ.

Fed Chairman Ben Bernanke said on Friday the U.S. economic
recovery has weakened more than expected and the Fed stands
ready to act if needed to spur slowing growth. [ID:nN27258237]

“Dollar/yen’s outlook appears very much tied to the
prospects for U.S. interest rates and U.S. data. We continue to
expect, by and large, below-consensus data, which would
continue to pressure dollar/yen to the downside,” Aroop
Chatterjee, currency strategist at Barclays Capital, wrote in a
note.

Some analysts cautioned, however, that recent pessimism
about the global economy may have been overblown.

“I’m more optimistic on the global economy than the market
is,” said Andrew Wilkinson, senior analyst at Interactive
Brokers Group in Greenwich, Connecticut. “I don’t think the yen
is going to continue rising. I wouldn’t be surprised if we have
seen the peak of yen strength at this stage.”

Aside from the yen, currency movements were limited in
European trade, with London markets closed for a holiday.

The euro lost 0.4 percent to $1.2707 (EUR=: ), as losses in
the U.S. stock market weighed on risk appetite.
(Editing by Leslie Adler)

FOREX-Yen gains broadly after BOJ easing move disappoints