Yen in full retreat as Fed says not alarmed by US dollar strength

A security worker is reflected in an electronic board showing the exchange rates between the Japanese yen against the US dollar, the euro, and Australian dollar, and market indices of Dow Jones, outside a brokerage in Tokyo, on Nov 19, 2014. -- PHOTO
A security worker is reflected in an electronic board showing the exchange rates between the Japanese yen against the US dollar, the euro, and Australian dollar, and market indices of Dow Jones, outside a brokerage in Tokyo, on Nov 19, 2014. -- PHOTO: REUTERS

SYDNEY (Reuters) - The yen slid further on Thursday, striking seven-year lows against the dollar and a six-year trough versus the euro as speculators poured into carry trades funded by a tide of super-cheap liquidity from the Bank of Japan.

The US dollar romped as far as 118.09 yen, up over a full yen in 24 hours and almost 10 yen since the BOJ sprang its surprise stimulus steps on the market at the end of October.

Likewise, the euro shot to 148.05, having gained 1.1 per cent on Wednesday and more than 10 yen in 14 sessions.

The dollar had a brief hiccup when minutes of the Federal Reserve's last policy meeting struck a more dovish tone than its post-meeting statement had.

But they also showed Fed members were relatively unconcerned about the dollar's strength, a marked contrast to most other major central banks where weaker currencies are favoured.

"The Fed has left the green light shining brightly for further USD gains," said Alan Ruskin, global head of currency strategy at Deutsche. "The USD/JPY take-profit zone still looks some way off - a little ahead of the major 120 yen level."

Many investors seemed to agree, with a Citibank poll of its customers finding almost 40 per cent expected the dollar to trade atop 120.00 yen by year end.

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