The yen slumped 22% in the past six months, the worst performer of the 10 developed-market currencies tracked by Bloomberg Correlation Weighted Indexes, on the government’s pledge to increase stimulus to end 15 years of deflation. The dollar gained 1.1% and the euro climbed 2.6%.
“We haven’t been at 100 for a long time, and there’s a lot of barriers around there,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “The yen will probably go through 100 versus the dollar shortly and then slow down.”
Three-month implied volatility for the yen against the dollar fell to 13% today after climbing to 13.6%, the highest level since March 2011.
The yen is near a key Fibonacci level that may temporarily interrupt its decline, according to Max Knusden, a currency analyst at ADS Securities LLC in Abu Dhabi.
“Prices have almost reached this week’s first key profit- taking target at 99.72, a 50% recovery to the bear market between 2007 and 2011,” he wrote in a note to clients. “As an important target for sentiment, some profit taking is likely.”
Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a new high or low.
The Australian dollar advanced against all of its 16 major peers as the BOJ decided at its April 3-4 meeting to step up bond purchases under the quantitative-easing stimulus strategy also used by the U.S. central bank.
“It’s QE everywhere,” said Hans Kunnen, chief economist at St. George Bank Ltd. in Sydney. “We’re not engaging in that practice, so the Aussie dollar should strengthen against the euro, U.S. dollar and yen simply on the basis of the interest- rate structure and a relative lack of supply.”
The Australian dollar strengthened 0.7% to $1.0489 after gaining 0.3% yesterday. The currency was up 0.3% to 103.73 yen and touched 103.83 yen, the highest since July 2008.
Thailand’s baht climbed 0.8% to 29.01 per dollar and reached 28.92, the strongest since July 1997, as demand for the nation’s bonds rose amid the monetary easing in Japan.
“With floods of cash in Japan where rates are so low, investors are seeking higher returns, and in this region, Thailand looks good thanks to its stable economy and political situation,” said Tsutomu Soma, manager of Rakuten Securities Inc.’s fixed-income business unit department in Tokyo. “The weaker yen won’t be harmful for Thailand, as it doesn’t compete with Japan, unlike South Korea or China.”