Yen slips in Asia

The Japanese yen slid to a nine-month low against the dollar on Monday as the break of a key chart level triggered stop-loss selling, while the euro held firm ahead of a fresh injection of liquidity by the European Central Bank. The Japanese currency has retreated in recent weeks following a surprise easing by the Bank of Japan, a fall in the country's current account surplus and a rise in short-term US bond yields.
"Last year the yen was bought by default (because of the euro zone crisis) as investors had few alternatives. These positions are now being unwound," said a trader at a Japanese bank. The dollar rose to a high of 81.661 yen in Asian trade on Monday, a gain of more than 7 percent since the start of month, as buying accelerated after it broke above major resistance at 80.94 on Friday.
Chartists saw the break as a major bull sign as it was the first time since 2007 that the dollar closed above that level on the Ichimoku cloud, suggesting the dollar's long decline since 2007 may be coming to an end. Indeed, the dollar failed to sustainably break a resistance at 81.62, a 61.8 percent retracement of its decline last year and later slipped back to around 81.14 yen, slightly below late New York levels, as Japanese exporters and speculators offloaded dollar.
"The dollar/yen appears to be coming close to a peak. The latest fall in the yen has been primarily driven by a fall in short-term Japanese bond yields but there's limited room left for them to fall," said Hideki Amikura, forex manager at Nomura Trust. The euro climbed to 109.915 yen, the highest since October 31, before ceding much of gains to trade at 109.05yen.
Against the dollar, the single currency stood at $1.3441, not far off the 2-1/2 month high of $1.3486 set on Friday. The European Central Bank (ECB) will this week offer, for the second time, an unlimited volume of cheap three-year loans to European banks.
"Interpreting the outcome will be difficult though as a high number could be seen as good in the sense that banks may be raising cheap money to lend, or bad in the sense that they are dependent on the ECB for funding," said Shane Oliver, head of investment strategy at AMP Capital Investors.
The resilience of the euro led the dollar to flounder at 2-1/2 month lows against a basket of major currencies. The dollar index was at 78.46, not far off Friday's trough at 78.220. The Australian dollar stood at $1.0685, a touch below its $1.0698 late in New York on Friday. Since hitting a six-month peak of $1.0845 on February 8, the Aussie has been drifting sideways. Against the broadly weaker yen though, the Aussie hit 87.42, the highest since early July, a gain of 7.7 percent so far this month.