FOREX-Yen resumes slide; euro hits 15-mth high vs dollar

* Cross/yen pairs rise, dollar broadly weaker

* Euro extends rise after breaching resistance this week

* Risk-on sentiment hurts both dollar and yen

* Aussie hits 29-yr high, SGD hits record high vs dollar

* Yen hurt by yield gap, concerns Japan’s exports may fall

By Masayuki Kitano

SINGAPORE, April 8 (Reuters) – The yen hit an 11-month low
against the euro and neared a six-month trough versus the dollar
on Friday and was seen poised for more weakness due to widening
yield differentials and concerns Japan’s exports may drop after
last month’s earthquake.

The euro climbed against the yen and touched a 15-month peak
against the dollar, supported by market expectations that the
European Central Bank will raise interest rates further in
coming months after a rate rise on Thursday.

Other than its rise against the yen, the dollar came under
broad selling pressure, sliding to a fresh 29-year low against
the Australian dollar, a record trough versus the Singapore
dollar, and a 16-month low against a basket of currencies.

“The dollar and yen are coming under pressure as investors
are more comfortable with risk,” said Christopher Gothard, head
of FX for Brown Brothers Harriman in Hong Kong.

“There are good signs about the strength of the global
recovery despite events in Japan, and for the moment that is
boosting confidence and boosting risk assets,” Gothard added.

The euro rose 0.7 percent to 122.48 yen , having
touched an 11-month high of 122.630 yen on trading platform EBS.

The euro poked above resistance near 122 yen on the
weekly Ichimoku chart, a form of Japanese technical analysis
widely used by market players. A buy signal would be confirmed
it the euro finishes the day above that resistance.

The euro rose 0.6 percent to $1.4387 , having touched
a 15-month high of $1.4405 earlier in the day. The euro’s rise
has extended following its breach this week of resistance near
$1.4283, its November high and roughly where it faced trendline
resistance drawn from its July 2008 record high.

For a chart on the euro:
ECB in graphics:
The euro zone’s debt struggle:


The yen has slid broadly over the past couple of weeks,
having sharply reversed course after surging to a post-World War
Two record high of 76.25 to the dollar on March 17.

That rise in the yen prompted the G7 to intervene jointly to
sell the yen and led to the yen’s subsequent fall. That shifted
investors’ focus to interest rate differentials and the appeal
of carry trades — a tactic of selling low-yielding currencies
to fund investment in currencies with higher yields.

There was some talk earlier on Friday of yen-selling against
the euro by Japanese brokerages, although others said the move
was fuelled by overseas players with stop-loss of the euro
having added fuel to its rise against the yen.

Market players said the yen looked set to weaken further
on the back of interest rate differentials, and concerns about
the economic impact from a massive earthquake and tsunami that
struck Japan’s northeast on March 11.

“It looks like the yen will weaken across the board,” said
Satoshi Okagawa, head of FX and money trading group for Sumitomo
Mitsui Banking Corporation in Singapore.

“It is impossible to imagine at this point just how much
Japan’s production and exports may fall, but the image is that
this is not the type of market condition that calls for buying
the yen,” Okagawa said.

The yen has been hurt by speculation that Japan’s trade
surplus may narrow or fall into a deficit in coming months.

Japan’s demand for overseas goods and resources may increase
due to rebuilding efforts. Exports are seen likely to decline
after factories and infrastructure were damaged by the March 11
diaster — a factor that could temper currency hedging by
Japanese exporters and lessen their yen-buying.

Sumitomo Mitsui Banking Corporation’s Okagawa said there
have been some strong flows recently in Asian currencies against
the yen such as buying of the South Korean won against the yen

“Japan has the lowest interest rates, and there is the also
the advantage of being able to capitalise on differences in
economic growth between Asian economies and Japan,” he said.

The dollar rose 0.3 percent against the yen to 85.131 yen
, nearing a six-month high of 85.530 yen hit earlier this

Except for its rise against the yen, the dollar was mostly
weaker, with the Australian dollar hitting a fresh 29-year high
of $1.0535 , and the Singapore dollar vaulting to a
record high against the greenback . The dollar index
fell to its lowest since December 2009 at one point.

(Additional reporting by Natsuko Waki in Tokyo, Reuters FX
analyst Rick Lloyd in Singapore, Ian Chua in Sydney; Editing by
Kim Coghill)

FOREX-Yen resumes slide; euro hits 15-mth high vs dollar