FOREX-Yen slips on BOJ story, sterling stays heavy

* Yen slips amid Japan monetary easing expectations

* Pound weakened by surprise drop in industrial output

* Aussie, NZ dlrs hit multi-week highs on China trade data

(Changes lead, adds quote, updates prices)

By Neal Armstrong

LONDON, March 10 (BestGrowthStock) – The yen slipped on Wednesday,
giving back recent gains, amid increasing expectations that the
Bank of Japan will adopt further easing measures, while sterling
fell on persistent credit and economic concerns.

The Japanese currency had been gaining near-term support
from repatriation flows as Japanese corporates looked to bring
offshore earnings back home for their fiscal year-end.

But a Reuters report that the Bank of Japan may ease
monetary policy as early as next week pushed the yen to session
lows against the dollar and the euro.

The BOJ is leaning towards easing monetary policy again next
week, sources said, but there is disagreement among policymakers
on its board on how to justify such a move. [ID:nTOE62908T]

“The BoJ easing story moved the market, causing the yen to
weaken. The market doesn’t need a lot of excuses to sell the yen
right now,” said NAB currency strategist Gavin Friend.

At 1225 GMT, the dollar was up around 0.5 percent (JPY=: ) at
90.40 yen after pressing to 90.50 in earlier trade. The euro
(EURJPY=R: ) traded with gains of around 0.6 percent at 123.10

Japanese machinery data released Wednesday had added to
easing expectations [ID:nTOE62801U].

“Japanese machinery orders were weak and underpinned the
likelihood that the BoJ will act further at the Match 16 BoJ
policy meeting to stimulate the economy.” said
analysts in a note.

The pound, already under pressure, dipped after an
unexpected drop in UK industrial production data for January.
[ID:nONS004855] Trade-weighted sterling (=GBP: ) fell to an
11-month low.

Sterling was down 0.5 percent at $1.4925, after falling to
$1.4873, its lowest since March 2.

Sterling maintained its downtrend after falling on Tuesday
on weak economic data, worries about Britain’s creditworthiness,
and political uncertainty.


Data on Wednesday showed Chinese exports and imports surged
past expectations in February, underscoring the momentum in the
world’s third-largest economy. [ID:nTOE62906P]

Commodity-linked currencies rose after the release of the
Chinese economic report, with the Australian dollar climbing to
a seven-week high against the U.S. dollar.

“They (Australian and New Zealand dollars) are benefiting
from good Chinese data which suggest that the economy there is
expanding strongly,” Commerzbank analysts said in a note.

The Australian dollar rose as far as $0.9171 (AUD=D4: ), its
highest since Jan. 20, according to Reuters data.

The New Zealand dollar (NZD=D4: ) rose 0.6 percent to a
three-week high of $0.7076. New Zealand’s central bank is
expected to keep interest rates unchanged when it announces its
policy decision due at 2000 GMT.

The euro rose 0.1 percent to $1.3612 (EUR=: ) after hitting a
session low of $1.3546. The single currency was hurt on Tuesday
after Fitch Ratings said it still had a negative outlook on
Portugal’s credit rating. [ID:nLDE6281JZ]

That fed concerns that peripheral euro zone economies may
face debt problems similar to those of Greece, where a fiscal
crisis has led investors to flee the euro in past weeks.

Stock Market Research

(Additional reporting by Tamawa Desai; Editing by Ruth

FOREX-Yen slips on BOJ story, sterling stays heavy