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RPT-FOREX-Tokyo warns again on yen strength

Published 11/04/2016, 06:12 pm
Updated 11/04/2016, 06:50 pm
© Reuters.  RPT-FOREX-Tokyo warns again on yen strength
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(Repeats to additional subscribers)

* Yen extends rally, dollar falls below 108 yen

* Japanese official warns again on "one-sided" moves

* Market still sceptical of threat of intervention in near-term

* Other majors little moved

* No reaction to China inflation data

By Patrick Graham

LONDON, April 11 (Reuters) - Another warning shot from the Japanese government on the possibility of intervention was not enough to halt the yen's march higher on Monday, the dollar falling below 108 yen to a new 17-month low.

Chief Cabinet Secretary Yoshihide Suga said the Group of 20's agreement to avoid competitive devaluations did not mean Japan cannot intervene against one-sided currency moves, repeating language which has flagged intervention in the past.

But with global stock markets in a generally shakier mood, demand for the traditional security of the yen among investors showed little signs of abating.

"The catalyst this week is going to be what happens in credit and equity markets," said Michael Sneyd, a strategist with BNP Paribas (PA:BNPP) in London.

"The S&P index (of U.S. stocks) has held up reasonably well. Its still within a range but it lost 1.5 percent last week and it does seem like the upward momentum has stalled."

He said that an index of risk appetite run by the French bank pointed to the potential for falls in U.S. and other stock markets. The Europe-wide FTSEurofirst index is already on a four-week downstreak.

The yen, by contrast, has gained for three weeks straight against the dollar. It rose 0.3 percent to 107.88 yen per dollar on Monday, having hit a high of 107.63 in Asian trading.

Suga told a news conference the government was closely monitoring the foreign exchange market with a sense of urgency, calling the yen moves one-sided and speculative. the running logic is that Tokyo cannot easily intervene ahead of G20 meetings in Washington this week and a round of G7 summits it is hosting in May.

"If there are clearer signs that a rate hike by the Federal Reserve is imminent, the dollar/yen could find a bottom," said Masatoshi Omata, senior client manager of forex trading at Resona Bank.

"But it seems like that has to wait for some time."

A number of U.S. Federal Reserve policymakers speak this week, but analysts held out little hope for that significantly reviving expectations for rises in interest rates this year.

Fed chair Janet Yellen's caution on policy has cooled any thoughts of a rise before mid-year even while a number of her colleagues have sounded more bullish.

The dollar index of its strength against a basket of other major currencies was roughly steady at 94.285. It was 0.2 higher against the euro at $1.1383.

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