FOREX-Yen gains broadly as BOJ easing move disappoints

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

* BOJ expands fixed rate fund supply program

* Euro falls vs dollar as stocks decline

(Adds comments, details; changes byline)

By Wanfeng Zhou and Aleksandra Michalska

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 to protect
exports and fight deflation if the yen continues to rally. For
details, see [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 early afternoon trading, the dollar fell 0.6 percent to
84.71 yen (JPY=: ) ,down from the day’s high above 85.92 hit
before the BOJ announcement, according to Reuters data. The
dollar earlier hit a session low of 84.56 yen, not far from its
15-year low of 83.58 yen set on electronic trading platform EBS
last week.

“The yen will probably stay exactly where it is now, said
Nick Bennenbroek, head of currency strategy at Wells Fargo,

“Clearly, additional monetary policies and extra funds that
the Bank of Japan added aren’t enough to see the yen weaken,”
he said. I don’t think it will go much higher than 84-85.”

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
regarding 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 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 1.2 percent to 107.36 yen.


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.

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,” Aroop
Chatterjee, currency strategist at Barclays Capital, wrote in a

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 0.7 percent to $1.2672 (EUR=: ), as losses in
the U.S. stock market weighed on risk appetite.

Investors are now turning attention to the release on
Tuesday of minutes from the U.S. Federal Reserve’s Aug. 10
meeting to get further insight into why policymakers opted to
buy more Treasury securities. Following that is the widely
watched U.S. non-farm payrolls report on Friday.
(Additional reporting by Vivianne Rodrigues in New York;
Editing by Andrew Hay)

FOREX-Yen gains broadly as BOJ easing move disappoints