* Yen hits 4-month high vs dollar, near all-time peak
* Analysts say dollar nearing attractive buy levels vs yen
* Euro slips as ECB rate hike outlook clouds
(Recasts, updates prices, adds comment, changes byline)
By Steven C. Johnson
NEW YORK, March 16 (Reuters) - The yen neared a record peak
against the dollar on Wednesday, but analysts say expectations
Japan will intervene to weaken the currency if it gets much
stronger may provide a good opportunity to buy the greenback.
The yen has attracted steady buyers since last week's
massive earthquake and tsunami hit Japan, with traders bracing
for investors and insurers to sell their overseas assets to pay
for repairs and claims at home. []
The dollar fell to a four-month low of 80.45 yen <JPY=>,
and BNP Paribas technical strategist Andrew Chaveriat said a
break of the November low of 80.25 and then 80 could put the
record low of 79.75 within reach, followed by a move to 77.05.
"The daily momentum is a bit oversold but not as much as in
October," he said. "And the weekly momentum is more powerful
than during the October decline and a lot less oversold."
Market participants, however, expect Japan to try to lean
against such a move by selling yen in the open market and
driving the dollar higher. A stronger yen would make Japanese
products less competitive and put further pressure on the
fragile economy, mired in a decades-long bout of deflation.
"If you get short yen around here before it hits 80 per
dollar, that's a really good trade," said Greg Salvaggio, vice
president of trading at Tempus Consulting in Washington.
He said Japanese authorities are likely to intervene if the
currency breaks below 80 and will probably have the blessing of
other central banks, given the circumstances.
"Excellent levels to buy the dollar against the yen are
imminent," said Ken Dickson, investment director of currencies
at Standard Life Investments, with 156.9 billion pounds ($252.5
billion) in assets. "These levels are attractive as we are not
convinced repatriation will strengthen the yen further."
Unease about the earthquake's impact on world growth and
unrest in the Middle East also boosted the Swiss franc, a
traditional safe haven currency, which hit a record high
against the U.S. dollar <CHF=> and was firmer against the euro
<EURCHF=>.
DOLLAR/YEN REBOUND BY YEAR-END?
Paresh Upadhyaya, head of Americas G10 FX strategy at BofA
Merrill Lynch, said the dollar may yet lurch lower against the
yen as the market tests stop-loss orders said to be layered
below 80.
But he said a disorderly move would almost certainly bring
in Japanese authorities and present "really good levels to get
long dollar for move back to around 90 yen by year end."
He said the damage to Japan's economy and increased need
for oil imports following problems at several nuclear reactors
will chip away at Japan's trade and current account surplus,
two factors that have contributed to yen strength in 2010.
Also, expectations that the Federal Reserve will start to
signal a move toward tighter monetary policy later this year
will shift make dollar assets more attractive, he said.
On Tuesday, the Fed said higher commodity prices were
putting upward pressure on inflation, though it called those
pressure transitory and did not change its economic outlook.
Against the dollar, the euro slipped 0.4 percent to $1.3945
<EUR=> after failing to break above a recent four-month high of
$1.4036. Traders said sell orders were clustered above $1.40.
European Central Bank Governing Council member Christian
Noyer on Wednesday said the central bank will weigh the impact
of Japan's crisis on policy decisions, clouding speculation the
ECB will raise interest rates next month. []
The head of the euro zone debt rescue fund also said it was
impossible to say if Greece will have to restructure its debts,
which, along with a Moody's downgrade of Portugal's sovereign
rating kept investors negative on the euro. []
[]
(Additional reporting by Naomi Tajitsu in London; Editing by
W Simon )
