Dollar hits 3-1/2 month high versus yen in Asia

The dollar hit a 3-1/2 month high versus the yen on Friday as upbeat US economic data added fuel to a rally sparked by the Bank of Japan's monetary easing earlier in the week. The dollar's rise also gained steam on stop-loss buying, and active bids from Japanese importers who have been caught off guard by its recent strength, traders said.
The yen fell broadly, hitting a 6-1/2 month low versus the Australian dollar and a two-month trough against the euro, as the Japanese currency extended its losses after the BOJ surprised markets this week by boosting its asset buying scheme by $130 billion and setting an inflation goal of 1 percent. "The near-term seems awfully likely to take dollar/yen higher," said Ray Farris, chief Asia strategist for Credit Suisse in Singapore.
The dollar will probably head higher against the yen, with yield spreads beginning to move higher in its favour, Farris said, adding that a focal point in coming months will be whether the BoJ conducts further easing if needed to achieve its inflation goal.
The dollar rose to a high of 79.18 yen on trading platform EBS at one point. That was the dollar's highest level against the yen since October 31, when Japan sold a record 8.07 trillion yen in currency intervention after the dollar hit a post-World War Two record low of 75.311 yen. The dollar last stood at 79.14 yen, up 0.3 percent from late US trade on Thursday.
The dollar is up about 2 percent so far this week against the Japanese currency, on track for its biggest weekly gain since the week spanning the end of October and early November, when Japan conducted its massive yen-selling intervention. "Buying by speculative accounts has been the main driver of this move higher," said a trader for a major Japanese bank in Singapore, referring to the dollar's recent rise. "Sizeable dollar/yen buying flows from (offshore) real money investors who had previously been long yen, have also been spotted," the trader said.
The dollar, which breached its 200-day moving average earlier this week, is now testing the 55-week moving average at 79.12 yen. Above that, the dollar's post-intervention high on October 31 lies at 79.553 yen. Higher up, the dollar faces major resistance in the 79.73 to 80.94 yen area, a range formed by the cloud on the weekly Ichimoku chart, a popular technical analysis tool.
The euro clung to the previous day's gains, supported by hopes that Greece was close to clinching a second bailout package. The single currency was little changed at $1.3124. Against the yen, the euro hit a two-month high at 104.04 yen at one point, and last stood at 103.84 yen, up 0.2 percent from late US trade on Thursday.
The Australian dollar hit a 6-1/2 month high of 85.48 yen at one point, and was last changing hands at 85.20 yen, up 0.4 percent on the day. Helping support the Aussie dollar were the launches of Japanese investment trusts, or touch in, targeting investment in Australian dollar bonds, traders said.