Yean falls in Asia

The yen fell to an 11-month low against the euro and a 2-1/2 year trough versus the Australian dollar on Monday, and looked set to weaken further as investors piled into carry trades in favour of higher-yielding assets. The US dollar dipped back in the direction of last week's 16-month low against a basket of major currencies, hurt by positive signs for investor risk-taking, and also extended its recent losses against some Asian currencies.
While some technical gauges suggested that rallies in the euro and the Australian dollar against the yen could pause in the near-term, traders said the broader trend of yen weakness was likely to remain intact. "If you look at gauges such as stochastic they are clearly in overbought territory," said Tsutomu Soma, senior manager for Okasan Securities' foreign securities department in Tokyo, referring to the recent rally in the euro and other currencies against the yen.
The euro earlier touched its highest against the yen since May 2010 of 123.33 yen on trading platform EBS, up about 16 percent from its mid-March low of 106.50 yen. The euro later trimmed its gains and last stood at 122.62 yen , down 0.1 percent from late US trade on Friday. The yen has fallen sharply in the wake of joint yen-selling intervention by the Group of Seven industrialised nations in March.
Market expectations for the Bank of Japan to lag behind other central banks in raising interest rates and a drop in volatility after the G7 intervention have shifted the market's focus to the appeal of carry trades, a tactic of selling low-yielding currencies to fund investment in higher-yielding currencies. Technical gauges such as the 14-day relative strength index and slow stochastics suggest that the euro and Australian dollar are in overbought territory against the yen, pointing to the possibility of a near-term pull-back.
Positioning in the Australian dollar also looks stretched judging from the US Commodity and Futures Trading Commission's latest data, which showed that currency speculators held a record long position in the Aussie dollar in the week to April 5. The Australian dollar touched a high of 90.04 yen earlier on Monday, its highest since September 2008. It later pared some of its gains and was last up 0.1 percent at 89.64 yen.
The Aussie dollar rose 0.1 percent against the dollar to $1.0573, near Friday's 29-year high of $1.0585. In a positive sign for global growth and risk trades, Chinese data on Sunday showed exports and imports were both stronger than expected in March, with little sign of any impact from the Japanese quake. The euro dipped 0.2 percent to $1.4461, but was still not far from a 15-month high around $1.4490 struck on Friday. The dollar dipped 0.2 percent against a basket of currencies to 74.932, near Friday's 16-month low of 74.838.