Yen briefly jumps

The yen briefly jumped to a three-week high against the dollar on Friday as speculators bought the currency, triggering stop losses, but a lack of expected strong follow-through buying by businesses saw the yen edge back. Short-term players had hoped repatriation flows from Japanese exporters would boost the yen further, but most Tokyo companies have already ended their currency hedging, traders said, suggesting end-of-business-year demand for the yen is fading.
The yen hit its highest level in three weeks at 81.83 yen, after tripping stops around Thursday's high of 81.90, but dollar buying by bargain hunters, including importers, saw it retreat to 82.03. "Speculators have been piling in ever since late New York trade, but many got burnt as exporter-buying was smaller than they had expected," said a senior spot trader for a major Japanese bank who did not want to be quoted by name.
Even though this year's eye-watering dollar rally has lost steam over the last three weeks, the greenback was still poised to end the January-March quarter nearly 7 percent stronger on the yen, in a move widely seen as one of the biggest surprises of 2012 so far.
"The dollar has gained on the back of improvements in the US economy and lack of more turmoil in the eurozone, with the Bank of Japan providing some additional support," said Koji Fukaya, chief currency strategist in Credit Suisse in Tokyo. The dollar's rally was also bolstered by Japanese importers who bought it to fund their surging demand for fossil fuels, after most nuclear reactors in Japan went offline in the wake of the Fukushima nuclear crisis.
The euro stood at 109.57 yen, pulling away from a trough of 108.76 hit overnight, its lowest in one week. Driven by its move against the dollar, the yen was a shade stronger against commodity-linked currencies with the Australian dollar down 0.2 percent at 85.36 yen. Still, with the year-end flows losing momentum, the Aussie was well clear of a six-week low of 84.55 hit the day before. With the dollar on the backfoot, the euro jumped 0.4 percent to $1.3355, with the move hastened after stop losses were taken out above the previous session's high at $1.3350 and by bargain-hunting in euro/yen.