* Good earnings, Spain's auction, German data lift sentiment
* Yen broadly slips ahead of Japan trade data, BOJ meeting
* Hawkish sounding BOC helps sparks loonie rally
By Hideyuki Sano and Ian Chua
TOKYO/SYDNEY, April 18 The yen fell broadly on
Wednesday, extending its slip from a seven-week high against the
dollar earlier this week, as a revival in risk appetite saw Wall
Street score its biggest gains in a month.
Upbeat earnings from U.S. companies such as Coca-Cola
, Spain's successful move to raise money in the debt
market and an unexpectedly strong reading of German investor
confidence all worked to boost market confidence.
The dollar rose as high as 81.284 yen, pulling
further away from Monday's trough of 80.29, while the euro rose
to 106.55 yen, well off Monday's low around 104.62.
The yen is coming under pressure ahead of Japan's trade data
on Thursday, which is expected to show Tokyo's trade balance
swung to deficit in March after a small surplus in February.
Also hampering the yen were expectations that the Bank of
Japan will likely take fresh easing steps on April 27, in
contrast to the growing perception in the market that the U.S.
Fed may not hint at new easing steps at its April 24-25 meeting.
"Firmness in the U.S. economic data appears to be reducing
the need for easing for now. So unless global shares fall
sharply, the yen is likely to come under pressure for the time
being," said a trader at a Japanese bank.
The dollar's possible target in the near term include 81.78,
a 38.2 percent retracement of its decline since March and April
10 high of 81.87.
While huge gains in Wall Street shares supported risk
currencies, the euro made only modest gains, with investors
still cautious ahead of Spain's bond sale on Thursday. It last
stood at $1.3119, off a high of $1.3173.
The clear winner overnight was the Canadian dollar, which
got an unexpected boost after the Bank of Canada (BOC) surprised
traders by suggesting that it was closer to raising interest
rates as economic conditions improve at home and abroad.
That saw the U.S. dollar fall to C$0.9886 from a high
of C$1.0011, bringing into focus this year's low of C$0.9842 hit
The BOC held its key rate at 1 percent as expected, but
issued a statement that included explicit language on eventual
rate increases for the first time since last July. That prompted
some dealers to expect a rate hike as early as the first quarter
of next year rather than late 2013.
"Relative rate expectations should work in the CAD's favour
particularly against the commodity currencies," analysts at BNP
Paribas wrote in a client note.
The Australian dollar could further underperform its
Canadian peer if inflation data due next week supports views for
a rate cut at the Reserve Bank of Australia's (RBA) May 1
The Aussie dollar fell to C$1.0244 from a high of
$1.0358, putting even more distance from the February peak of
C$1.0783. Against the U.S. dollar, the Australian dollar stood
almost flat at $1.0400.
Commodity currencies fared well thanks to the improved risk
sentiment. The Australian dollar popped above $1.0400
from lows around $1.0305. It appeared to have found a solid base
near $1.0200, even with the market bracing for a May 1 rate cut.