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Yen tumbles vs euro, US dollar as markets on alert for Japan intervention - REUTERS
- Yen sinks to 34-year low vs dollar, 16-year trough vs euro
- Euro rises to two-week high vs dollar
- U.S. business activity cools down
- Focus on U.S. GDP, inflation data
LONDON/NEW YORK, April 23 (Reuters) - The yen dropped to multi-year lows against the U.S. dollar and euro on Tuesday, keeping investors on heightened intervention watch ahead of this week's Bank of Japan meeting, while dovish policy maker comments left sterling near its weakest in months.
The euro reached 165.71 yen, its highest since 2008, after data showed business activity in the euro zone expanded at its fastest pace in nearly a year, primarily due to a recovery in services. Europe's common currency was last up 0.4% at 165.59 yen.
The dollar rose to 154.88 yen , its highest since 1990 and edging closer to 155, a level seen by many participants as the new trigger for intervention by Japanese authorities. The greenback was last flat on the day at 154.78 yen. "Japan's yen has failed to capitalize on fairly explicit intervention warnings from Finance Minister Shunichi Suzuki, suggesting that market participants expect no change in policy settings when the Bank of Japan meets later in the week," said Karl Schamotta, chief market strategist, at Corpay in Toronto. Advertisement · Scroll to continue
"If officials fail to lower asset purchases - currently running at around six trillion a month - rate differentials should remain yawningly wide, helping nullify any short term intervention efforts." Japanese Finance Minister Shunichi Suzuki said last week's meeting with his U.S. and South Korean counterparts has laid the groundwork for Tokyo to act against excessive yen moves, the strongest warning to date on the chance of intervention.
However, there were doubts whether Tokyo would act so close to the BOJ's two-day policy meeting that starts on Thursday. Japan's central bank was expected to project inflation would stay around its 2% target for the next three years in new forecasts due on Friday, signalling its readiness to cautiously raise interest rates again this year from near-zero levels. "We've had jawboning now for a number of weeks, and they still haven't come in and intervened directly .
So people are questioning what's going to bring them to the table," said Lee Hardman, senior currency strategist at MUFG. Advertisement · Scroll to continue