News: FOREX-Yen takes a breather as Bank of Japan swings into bond market

The yen fought to regain a footing on Tuesday, recovering a little from heavy selling as some traders start to see risks of official pushback if Japan's currency falls much further.

The yen JPY=EBS has been hammered some 7% lower through March as the Bank of Japan (BoJ) has stuck with dovish policy settings - this week buying bonds to defend its yield target - while central banks in the rest of the world are hiking rates.

On Monday it dropped as far as 125.10 versus the dollar, round about where authorities have made verbal pushback in the past. On Tuesday it rose about 0.5% in Asia trade to sit at 123.32 to the dollar.

The greenback was broadly steady, meanwhile, keeping the euro EUR=EBS at $1.0996 and capping a recent rally in the Australian dollar AUD=D3 to hold it just below $0.75.

Japan's central bank bought a little more than $500 million in bonds on Monday and another $2 billion on Tuesday morning, having vowed to make unlimited purchases in the market until Thursday to defend its 10-year yield target of 0.25%.

The move, a demonstration of resolve to keep Japan's monetary policy ultra easy, underlines the stark contrast with an ever-more-hawkish sounding U.S. Federal Reserve and has tipped the already-sliding yen off a cliff.

But with Japanese government bonds (JGBs) barely rallying, and indeed five-year bonds selling further, it is clear that some investors doubt the longevity of Japan's policy.

"Anyone who watched the RBA 'cap' blow is probably excitedly (and logically) short (on) JGBs right now hoping for a similar move in Japan rates," said Brent Donnelly, president at analytics firm Spectra Markets, referring to the Reserve Bank of Australia's (RBA) abandonment of its yield target in November.

Minutes from the Bank of Japan's March meeting published on Tuesday showed policymakers stressing the need to keep monetary policy ultra-loose, even as some of them saw signs of growing inflationary pressure.

Yet economists see pressure for a shift if persistent yen weakness exacerbates inflation by raising import costs, particularly for energy, and reckon that 125 is a key level.

"Japanese yen depreciation is a big problem for the Japanese economy, because the economy - especially households - is facing rising inflation and yen depreciation could accelerate that," said Kentaro Koyama, chief economist at Deutsche Bank in Tokyo.

"If the dollar/yen rate exceeded 125 I'd expect some more severe verbal intervention," he said, coming either from politicians or even the central bank.

Japanese Finance Minister Shunichi Suzuki said on Tuesday that Japan will carefully watch foreign exchange market movement to avoid "bad yen weakening".

The country's top currency diplomat Masato Kanda said that excess foreign exchange volatility was undesirable.

Among other majors the New Zealand dollar NZD=D3 was a fraction weaker at $0.6889 and sterling GBP=D3 was under pressure at $1.3093.

Bitcoin BTC=BTSP hovered at $47,600, just below its 200-day moving average and the almost three-month high of $48.234 that it reached a day ago.

European consumer confidence data and U.S. job openings figures are due later in the day.

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	Currency bid prices at 0511 GMT 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	   EUR=EBS	$1.0985		$1.0988	 +0.00%		 -3.36%	  +1.0998	 +1.0969 
 Dollar/Yen		JPY=EBS	123.4350	   123.8650	-0.40%		 +0.00%	  +124.3000   +123.1500 
 Euro/Yen		 																			 
 Dollar/Swiss	  CHF=EBS	0.9339		 0.9345	  -0.05%		 +0.00%	  +0.9356	 +0.9330 
 Sterling/Dollar   GBP=D3	 1.3095		 1.3095	  -0.01%		 -3.18%	  +1.3106	 +1.3080 
 Dollar/Canadian   CAD=D3	 1.2514		 1.2517	  +0.02%		 -0.98%	  +1.2530	 +1.2514 
 Aussie/Dollar	 AUD=D3	 0.7485		 0.7492	  -0.09%		 +2.97%	  +0.7507	 +0.7475 
 NZ				NZD=D3	 0.6896		 0.6897	  +0.07%		 +0.00%	  +0.6908	 +0.6889 
 Dollar/Dollar																				   

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX

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World FX rates	https://tmsnrt.rs/2RBWI5E 

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