By Masataka Nakamura
Tokyo, June 13 (BridgeNews) - The U.S. dollar/yen and euro/yen edged higher in Asia Wednesday led by US players. Stop loss buying above 122.00 for dollar/yen and above 104.10 for euro/yen also helped strengthen the pair and cross. Euro/dollar was stuck in a tight range, though euro/yen buying supported the pair.
Dollar/yen bounced from 121.55 on buying after the market failed to test the technically watched 121.50 level. Masakazu Bunno, assistant general manager at international trading department at Sumitomo Mitsui Banking Corporation said that the 121.50 area provided solid support for dollar/yen. Japanese trust banks were also buying the pair. There was some rumor of a looming Japanese credit rating downgrade, but this was mostly discounted as position talk.
The rally was capped initially at 122.29 by profit taking and Japanese exporter selling. However, the dollar/yen carried a positive tone as U.S. investment banks were persistent buyers of the dollar/yen though mid-session.
In the afternoon, dollar/yen was seen underpinned by a report that Minister of Finance Masajyuro Shiokawa said that Bank of Japan Governor Masaru Hayami is considering flexible monetary policy. The comment raised speculation that the BOJ might consider further quantitative easing at the BOJ council meeting, while the economic downturn is more evident. Liberal Democratic Party Secretary General Taku Yamasaki said Wednesday that Japan's council on economic and fiscal policy needs to call on the Bank of Japan to ease credit further.
LDP Taku Yamasaki's call for BOJ easing and BOJ Masaru Hayami's comment on flexible monetary policy helped underpin the tone of the dollar/yen, Bunno at Sumitomo Mitsui Banking corporation said. In the afternoon some U.S. names were aggressively buying dollar/yen. They bought the pair in size repeatedly on dips. Facing those buying, inter-bank traders were soon caught in shorts and bought back the pair. Meanwhile, the top side was capped by the selling interest in the 122.40-50 area.
Euro/dollar was restrained by some selling from a U.K. name, in the face of U.S. investment bank buying. Dollar/Swiss Franc buying from Swiss names also weighed on the pair. However, the downside move was checked by buying interest near the 0.8500 area and euro/yen buying pressures. Just before the closing, the euro moved higher against dollar, on buying from Swiss names and short covering pressures.
Japan's current account balance in April posted a 877.6 billion yen surplus, down 24.4% on the year, the Ministry of Finance announced Wednesday.
The current account surplus fell on the year in April, resulting in falls for five straight months though April. The dollar/yen rose when the data was released. However, few market participants linked the data release with dollar/yen buying, as the release showed the bigger than expected surplus for April
Japan's net fund outflow amounted to 45.3 billion yen in April. Foreigners o bought net 944.3 billion yen of Japanese securities, with 1.0811 trillion yen net buying of Japanese stocks and 136.8 billion yen net selling of Japanese bonds. Japanese investors bought net 989.7 billion yen of foreign securities with 287.9 billion net buying of foreign shares and 701.8 billion net buying of foreign bonds.
U.S. Federal Reserve Governor Edward Gramlich said that buying foreign bonds would be the best investment option for the U.S. as its national debt is gradually retired. The comment attracted some interest from dealers, but it did not lead to major price action. End