* Yen near day's lows as cross profit-taking dries up
* Dlr/yen 1-month implied vols drop to post-crisis lows
* Euro still struggling on euro zone debt concerns
* Canadian dlr hits 22-mth peak as hawkish BOC supports
By Kaori Kaneko
TOKYO, April 21 (Reuters) - The yen hovered near the day's
lows on Wednesday as strong U.S. earnings and gains in Asian
stocks fed a rebound in commodity and other currencies, while the
Canadian dollar climbed to its highest in nearly two years.
The euro, still battling worries about debt-laden Greece,
struggled as selling against the yen said to be related to bond
redemptions kept it at its lowest in two weeks on the dollar.
The Canadian dollar <CAD=D4> strengthened broadly after the
Bank of Canada signalled the day before that an interest rate
rise may come as early as June, and it climbed 0.3 percent
against the yen, outperforming other crosses.
"Generally, upbeat U.S. earnings are helping investors look
for risk tolerance trades and real money players are seeking
opportunities to buy on dips in yen crosses," said Hiroshi Maeba,
deputy managing director of FX trading at Nomura Securities.
Apple Inc <AAPL.O> posted results that blew past
expectations, sending its shares up more than 5 percent to a
all-time high. That followed strong results from Goldman Sachs
<GS.N>, and traders said robust earnings were boosting optimism
about the global economy and supporting risk appetite.
Against the Canadian dollar, the U.S. dollar fell as low as
C$0.9931, the lowest since June 2008 and down 0.5 percent on the
day.
The Canadian dollar rose 0.3 percent to 93.62 yen <CADJPY=R>,
extending Tuesday's 2.5 jump. It has risen about 11 percent since
starting to rally in late February.
The Australian dollar, another commodity-linked currency,
added to Tuesday's 1.7 percent gain and rose to 86.97 yen
<AUDJPY=R>.
The Aussie has been a popular play against the low-yielding
yen thanks to its trade links to China and to its rising interest
rates, and has climbed about 12 percent since early February.
The dollar held steady at 93.23 yen <JPY=>, after gaining 0.9
percent on Tuesday when it rose to 93.40, although it remains
below a recent seven-month high at 94.78 yen.
Implied volatility on one-month dollar/yen options fell to a
post-financial crisis low of 9.75 percent <JPY1MO=>, according to
Reuters data.
A senior options trader at a Japanese bank said investors,
who expect low volatility in the market in the short term, sold
such options and began entering carry trades, selling the yen
against other currencies.
Falling volatility in overall assets, reflected by a 9.3
percent decline in the VIX index <.VIX>, Wall Street's favourite
gauge of risk sentiment, also encouraged investors to move into
risky carry trades, the trader said.
SEPARATING THE RISKS
The euro <EURJPY=R> struggled after rising as high as 125.64
yen on EBS the previous day, and stood at 125.28 yen <EURJPY=R>,
nearly flat on the day.
A hedge fund sales trader said euro/yen flows were mixed
although many were selling into any rallies and few reckoned it
has much scope to rise substantially.
But he said the market was also cautious that with talks
expected to start on Wednesday between Greece, EU and IMF
officials, any positive news could force some short-covering.
The euro <EUR=> eased 0.1 percent to $1.3420, with light
stops expected at $1.3375-80, a trader at bank in Singapore said.
The yen surged at the end of last week and the start of this
on fears about broader fallout from the fraud charges against
Wall Street giant Goldman Sachs and concerns that China would
tighten policy to curb speculation in the property sector.
The Aussie held broad gains at $0.9328 <AUD=D4>, a day after
the release of hawkish minutes from the Reserve Bank of
Australia's last board meeting. At that gathering, the central
bank raised the cash rate by 25 basis points to 4.25 percent and
signalled more rate hikes in coming months.
(Additional reporting by Anirban Nag in Sydney, and Satomi
Noguchi and Charlotte Cooper in Tokyo; Editing by Joseph Radford
and Chris Gallagher)
