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Dollar/yen breaks 155; euro/yen over 167

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Traders see little chance of Japan hike, await inflation

f'casts

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Dollar slips on U.S. GDP miss

By Tom Westbrook

SINGAPORE, April 26 (Reuters) - The yen was parked by a

34-year low on the dollar and decade lows on other crosses ahead

of a Bank of Japan meeting where interest rates are expected to

stay low, while the dollar dipped elsewhere on

softer-than-expected U.S. growth data.

The euro rose 0.3% overnight to a two-week high of

$1.0728 following data showing the U.S. had grown at its slowest

pace in nearly two years in the first quarter. The annualised

rate of 1.6% missed economist forecasts for 2.4%.

The Australian dollar, which has been boosted by a

hotter-than-expected inflation reading this week, briefly topped

its 200-day moving average to hit $0.6539, before settling to

$0.6522 in Asia trade on Friday.

The yen, however, fell to its weakest since 1990

at 155.75 per dollar, tracking a sharp rise in U.S. yields as

separate figures showed a surge in an inflation measure.

That opened - at the 10 year tenor - a 380

basis point gap over Japanese yields that it can be expected to

stay wide with U.S. rate cut expectations evaporating and

markets now pricing only 34 basis points of cuts in 2024.

The size and persistence of the yield gap has encouraging

short yen positions and drives Japanese money into dollar assets

such as Treasuries, weighing on the currency.

The yen has slipped past levels at 152 and 155 to the dollar

where traders had been wary of pushback or intervention from

officials and was last trading at 155.58 per dollar.

Japanese Finance Minister Shunichi Suzuki said on Friday he

was closely watching currency moves and prepared to take full

steps in response. Short yen positions hit their largest for 17

years last week.

On Thursday the yen made a near 16-year low of 167.06 per

euro, and was near those levels in the Asia morning

on Friday, and it touched a nine-and-a-half year low of 101.64

to the Aussie dollar.

The Bank of Japan already hiked rates at a landmark meeting

in March where it ended years of negative interest rates.

Market expectations are low for any fresh policy shift on

Friday, but are keenly watching for changes to inflation

projections - which would broadcast an intent to hike rates - or

to any guidance on the interest rate outlook.

"The market is not pricing in much from this meeting but

it's important to watch where they set official inflation

targets, and whether they revise their forecast," said Nathan

Swami, Citi's Asia-Pacific head of FX trading in Singapore.

"I'm expecting them to, which then opens up the summer

meetings as live."

Sterling rose 0.4% overnight and was last at

$1.2507. The New Zealand dollar was a touch firmer in

Asia morning trade at $0.5960 and has gained in the previous

four sessions.