Friendless yen faces third straight week of decline

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SINGAPORE — The yen was headed for its

worst week in two years on Friday, pummeled by Japan’s rising

import costs and low interest rates, while commodity currencies

were set for a second consecutive weekly gain on the dollar as

export prices remain elevated.

The euro has been slightly softer this week and

was pinned at $1.1005 by concern that conflict in Ukraine will

hurt Europe’s economy by raising energy and food costs.

Australia is an exporter of both and rising prices have

helped the local dollar to a second weekly rise of more than 1%

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in a row. The Aussie was last steady at $0.7508, just

below an overnight four-month high of $0.7527.

The yen, by contrast, is breaking down and has

shed 2.6% against the greenback for the week. It has fallen past

the psychological 120-per-dollar barrier and, at 122.44, is

eyeing a test of major resistance around 123.70.

It has lost nearly 6% through March and been smoked even

harder on crosses, losing some 8% against a resurgent Aussie in

just eight sessions.

The latest leg of the tumble was triggered by hawkish

remarks from Federal Reserve Chair Jerome Powell this week, and

a subsequent rip higher in US yields.

The Bank of Japan (BOJ) has also stuck, by contrast, to a

dovish tone, though some traders are starting to think that, at

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a six-year low, the yen is plumbing some uncomfortable depths.

“One thing to watch for in dollar/yen is pushback from

policymakers in Japan,” said Brent Donnelly, trader and

president at analytics firm Spectra Markets.

“I’m not sure we’re quite there yet, but the 123.50/125.00

level is almost certain to attract some attention and generate

headlines from either PM (Fumio) Kishida or FinMin

(Shunichi) Suzuki,” he said.

“Pushback could also come from BoJ (Governor Haruhiko)

Kuroda.”

The bond market is also putting policymakers between a rock

and a hard place by bringing on a challenge to yield curve

control, which if defended could further weaken the yen.

The yield on 10-year Japanese government bonds

hit 0.235% on Friday, close to its upper limit of

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0.25%.

Inflation is yet another pressure point, and core consumer

prices in Tokyo have logged their fastest annual increase in

more than two years this month, data showed on Friday.

Elsewhere gains in commodity prices have supported the New

Zealand dollar, though it has run into stiff resistance

just short of $0.70 and was last at $0.6964.

Sterling hovered at $1.3190 as traders weigh a

cautiously dovish outlook from the Bank of England against

February data that showed higher-than-expected inflation.

Russia’s rouble traded firmly in Moscow

overnight following Russian President Vladimir Putin’s vow to

start selling gas to “unfriendly” countries in roubles, but it

handed back some gains in thin offshore trade.

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It was last at 102.00 per dollar.

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Currency bid prices at 0034 GMT

Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Euro/Dollar $1.1009 $1.0998 +0.10% -3.16% +1.1011 +1.0995

Dollar/Yen 122.1400 122.3150 +0.09% +0.00% +122.4300 +122.3500

Euro/Yen

Dollar/Swiss 0.9281 0.9301 -0.19% +1.77% +0.9302 +0.9279

Sterling/Dollar 1.3193 1.3188 +0.02% -2.47% +1.3198 +1.3189

Dollar/Canadian 1.2536 1.2526 +0.09% -0.84% ​​+1.2538 +1.2518

Aussie/Dollar 0.7510 0.7514 -0.04% +3.32% +0.7518 +0.7504

NZ 0.6964 0.6965 +0.01% +1.76% +0.6966 +0.6958

Dollar/Dollar

All spots

Tokyo spots

Europe spots

Volatilities

Tokyo Forex market info from BOJ

(Reporting by Tom Westbrook. Editing by Sam Holmes.)