Yen falls broadly in London

The yen fell broadly on Friday as European authorities sold the Japanese currency in the first co-ordinated Group of Seven intervention since 2000, but traders said impact in European time appeared to be limited. Traders braced for more possible yen selling when the North American session begins, with the Federal Reserve and the Bank of Canada also widely expected to play their part in the yen-selling effort.
The dollar rose as high as 82.00 yen early in the European session. Speculators such as hedge funds tested the authorities' resolve by buying into the yen's sell-off, but talk of official bids around 81.20 yen limited further gains in the Japanese currency. Market participants still anticipate repatriation flows into Japan after last week's earthquake and the subsequent nuclear crisis will support the yen, but analysts suspect Tokyo will defend the dollar until the country's financial year ends on March 31.
"It will be interesting to see whether any speculators will be brave enough to try and push the dollar down through 80 yen again," said Adam Myers, senior currency strategist at Credit Agricole CIB. All of the major G7 European central banks confirmed they had joined in the move, pushing the euro to a session high of 115.56 from around 114.70. The Federal Reserve was expected to jump in when US markets open around 1200 GMT.
By 1124 GMT, the dollar traded roughly 3.5 percent higher on the day at 81.45 yen, with traders reporting heavy dollar offers at 82.00 yen. The US currency extended its gains only marginally in the European session, but it has extended its rebound from a record low of 76.25 yen hit on Thursday.
The euro traded 4 percent higher at 115.00 yen. Tokyo market estimates put the BoJ's earlier intervention at 2 trillion yen ($25 billion) over the course of the day, similar to its big one-day bout of intervention in September. Many in the market said the amount spent in the European session was significantly lower.
Upside targets were 5at 82.45, Monday's peak, and then 83.30 - the intraday high from last Friday before this week's fireworks. As the dollar rebounded, the cost of hedging against a further yen rise fell. Implied volatility on one-month dollar/yen options was at around 13.5 percent, well off highs near 21 percent on Thursday and showing the market calming a bit.
The euro rose to a four-month high against the dollar of around $1.4135 after the intervention in euro/yen, up around 0.8 percent on the day. The Australian dollar was up 1 percent at $0.9917, barely moving after China's central bank raised level of its banks' reserve requirements on Friday.