* Yen edges up as investors take profits on higher-yielders
* BOJ tankan improves, matches expectations
* Kiwi falls after IMF says it is overvalued
* Japan min says Japan Post should consider foreign bonds
By Satomi Noguchi
TOKYO, April 1 (Reuters) - The dollar eased against the yen
on Thursday, taking a breather after hitting a three-month peak
on speculation that Japanese investors will look for higher
returns abroad now that the new fiscal year has started.
Analysts said the yen's broad slide this week had been fast
partly due to flows linked to the month-end and quarter-end, but
that now some traders may be more inclined to take profits from
gains in the dollar and other major currencies.
The Bank of Japan's tankan survey showed Japanese business
sentiment improved in March to its highest level since September
2008, but the yen took the report in stride as it nearly matched
expectations. []
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Insider Tankan comment http://link.reuters.com/bez95j
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The New Zealand dollar fell sharply after the International
Monetary Fund said it is currently overvalued by 10-25 percent.
[]
"We are cautious of predicting further dollar gains just as
the market has exceeded our expectations, which were for
dollar/yen to mark 93 yen at the end of June," said Masafumi
Yamamoto, chief FX strategist at Barclays Capital in Japan.
"There is a risk that dollar/yen will reverse its recent
gains, but the price action suggests the dollar's downside looks
very limited."
The U.S. dollar was unchanged from late New York trade on
Wednesday at 93.47 yen <JPY=> after sliding as low as 93.28 yen
from a three-month peak of 93.65 yen on trading platform EBS hit
earlier in the day.
Traders say sentiment towards the yen is turning bearish
heading into the new quarter. Many expect a pick-up in Japanese
investor demand for foreign currencies, better risk appetite,
expectations that U.S. Treasury yields will rise, and widening
rate differentials over Japanese government bonds to weigh on the
yen.
The yen's reaction was muted after Japan's Internal Affairs
Minister Kazuhiko Haraguchi told Reuters in an interview that
Japan Post should consider investing more in foreign bonds.
[]
Japan Post is the country's largest financial institution.
Minoru Shioiri, chief manager of forex trading at Mitsubishi
UFJ Securities, said investors possibly held back as the dollar
had already climbed to a crucial level near 94 yen, though
overseas players set to enter the market later in the day may be
more responsive to the news.
"Still, the mood is cautious ahead of U.S. jobs data. The ADP
data wasn't really good, and if U.S. yields were to fall after
tomorrow's jobs numbers, dollar/yen will lose one of its upward
drivers," Shioiri said.
Traders are eyeing the next major resistance around its early
January high of 93.78 yen and say a daily close above 93.80 yen
would be a bullish event for the dollar and could take it past
95.00 yen in the near term.
U.S. JOBS DATA
Some players said the greenback may stay on the defensive
against other major currencies after Wednesday's ADP data showed
private-sector employers cut jobs this month, despite forecasts
for a gain. The data raised market caution that expectations for
Friday's government payrolls numbers may be too high.
[]
Analysts are expecting the government jobs report to show the
U.S. economy added 190,000 jobs in March, albeit aided by
temporary government hiring for the 2010 U.S. Census.
The dollar index <.DXY> <=USD> was little changed at 81.036,
having been hurt by the greenback's fall the previous day on the
disappointing ADP numbers and quarter ending fixing flows.
For the first quarter, the index rose 4 percent -- its best
quarterly performance since the first quarter of 2009.
Expectations that the Federal Reserve will raise interest
rates from record lows before central banks in Japan and Europe
tighten monetary policy, also boosted the dollar.
The euro <EUR=> erased an earlier spike to $1.3562 and traded
flat at $1.3510, remaining vulnerable to sovereign risks
festering in the background.
It was steady at 126.31 yen <EURJPY=R> after traders booked
profits from gains to a two-month high of 126.62 yen struck
earlier.
The New Zealand dollar <NZD=D4> fell 0.8 percent to $0.7051
and it dropped 0.9 percent to 65.87 yen <NZDJPY=R> after earlier
striking an over two-month peak around 66.50 yen.
(Additional Reporting by Anirban Nag in Sydney and Aiko Hayashi
in Tokyo; Editing by Joseph Radford and Chris Gallagher)
