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FOREX-Yen buoyed by subdued risk appetite, hits 2-yr high vs euro

Published 01/03/2016, 03:06 pm
Updated 01/03/2016, 03:10 pm
© Reuters.  FOREX-Yen buoyed by subdued risk appetite, hits 2-yr high vs euro
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* Yen broadly bid, hits two-year highs vs euro

* China's latest stimulus fails to excite markets

* Euro pressured with bold action from ECB expected next week

* RBA stands pat as expected, Aussie shows little reaction (Updates throughout)

By Shinichi Saoshiro and Ian Chua

TOKYO/SYDNEY, March 1 (Reuters) - The yen was broadly firmer on Tuesday after soft economic data weighed on the euro and dollar and as lingering nervousness over the health of the global economy favoured the safe-haven Japanese currency.

Risk appetite remained subdued in Asia, not helped by a lacklustre Caixin/Markit China factory activity survey. ECONCN

Equity markets took a hit at the start of the week after a weekend meeting of G20 officials disappointed investors with no new plans to spur global growth

The euro fell as far as 122.085 EURJPY=R , reaching a low not seen since April 2013.

The dollar lost 0.2 percent to 112.44 yen JPY= . The greenback had soared to 114.00 late last week thanks to upbeat U.S. data. But it was dragged down on Monday after weak home sales and Chicago Purchasing Manager Index numbers tempered enthusiasm towards the world's largest economy. ECONUS

"As expected, the G20 meeting did not result in big changes and it's now easier to buy the yen. There were no strong policy statements - they merely reiterated that competitive currency devaluations were not a good thing - and the yen appeared a good bargain after last week's slide," said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

The Japanese currency was also buoyed after market reaction to China's latest easing was underwhelming at best, perhaps reflecting a growing view among global investors that major central banks are running out of ideas to spur growth.

China's central bank late on Monday announced it was cutting the amount of cash that banks must hold as reserves, its fifth since Feb. 2015. euro came under pressure overnight after a February reading on euro zone inflation proved weaker than expected. The euro was little changed at $1.0884 EUR= after falling to a four-week low of $1.0859 on Monday.

Since peaking at $1.1377 on Feb. 11, the euro has been on a steady slide as markets bet the ECB will act at its March 10 policy review.

"Inflation is now negative throughout the big four euro zone economies... that is seen to mandate a strong response from the ECB on 10 March," noted Ray Attrill, global co-head of FX strategy at National Australia Bank.

The Australian dollar was down 0.2 percent at $0.7125 AUD=D4 , showing little reaction to the Reserve Bank of Australia's widely expected decision to hold interest rates at a record low 2 percent.

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