* Yen wallows at multi-year lows vs USD & EUR
* Euro still favoured among G3, but ECB event-risk looms
* RBA, BOE also in focus this week
By Ian Chua
SYDNEY, Feb 4 The yen started the new week with
a nagging problem, it remained the currency of choice to sell
with the Bank of Japan seen under the most pressure among major
central banks to ease policy aggressively.
The dollar bought 92.80, having scaled a 2-1/2 year
high of 92.97 on Friday. It pierced through resistance around
91.60, putting it on track to retest 95.00, a level that had
capped it in 2010.
The euro also extended its rally to 126.97,
nearing its 2010 peak of 127.46. It was last at 126.79.
Only 5 weeks into the year and the common currency is
already up some 2 percent against the yen. The dollar is nearly
7 percent higher, following a rise of about 13 percent for 2012.
"The Japanese authorities have committed themselves to a 2
percent inflation target, but the market perceptions about
economic growth and inflation expectations remain subdued,"
analysts at Barclays Capital wrote in a note.
"We therefore believe that the authorities will continue to
use the JPY as a tool to boost actual inflation, thus helping to
validate the new 2 percent target."
Data last Friday showed currency speculators added bearish
bets on the yen, while trimming bets against the greenback.
Among the G3 currencies, the euro has been the standout
performer, having notched up gains of 3.5 percent on the
greenback so far in 2013 as well.
It was last at $1.3647 after climbing as high as
$1.3710 on Friday, a level not seen since late 2011.
Data last Friday showing euro zone factories had their best
month in nearly a year during January underscored optimism for
U.S. jobs data was mixed with employment growing modestly in
January. Encouragingly, job gains in the previous two months
were larger than first reported.
Part of the reason for the euro's outperformance is the
European Central Bank's relatively upbeat view on the euro zone
economy. Yet the strength of the currency is sure to sit
uncomfortably with the ECB, which has an opportunity at
Thursday's meeting to make a clear statement about that.
Still, any attempts by ECB President Mario Draghi to talk
down the euro will likely only have a temporary effect, analysts
The Bank of England also meets Thursday and should maintain
a dovish tone. This will give no reprieve to sterling, which has
slumped to 15-month lows on the euro. The common currency bought
86.91 pence, having risen as high as 87.16 pence.
Commodity currencies have somewhat faded into the
background, although the New Zealand dollar has been quietly
grinding higher thanks to recent hawkish-sounding comments from
the Reserve Bank of New Zealand.
The kiwi drifted up to a 16-month high on the greenback at
$0.8493 and hit a 2-1/2 year peak on the Australian
dollar, which slid to NZ$1.2274.
The Aussie is set to remain on the backfoot with the Reserve
Bank of Australia (RBA) likely to keep the door open to more
rate cuts this week.
While the RBA is not expected to ease at its first meeting
of the year on Tuesday, analysts expect it will eventually be
forced to do so later in the year given many parts of the
economy are still struggling with a strong currency.