July 23, 2018 / 1:47 PM / 9 months ago

CORRECTED-FOREX-Japanese yen rises on report BOJ eyes policy change

 (Corrects first bullet to say rises instead of falls)
    * Yen rises to 2-week highs vs euro, dollar
    * Japanese 10-year government yield spikes to 6-month peak 
    * Trump's comment on Iran spurs safe-haven bid for yen

    By Richard Leong
    NEW YORK, July 23 (Reuters) - The yen strengthened broadly
on Monday following a Reuters report that the Bank of Japan was
debating moves to scale back its massive monetary stimulus,
spurring bids for the Japanese currency.
    The yen's gains were modest, with the 10-year Japanese
government bond yields hitting a six-month high, as traders
wanted to see concrete measures from the BOJ.
    "The market may be too complacent that the BOJ would be in
this easy policy mode forever," said Omer Esiner, chief market
analyst at Commonwealth Foreign Exchange in Washington. "We have
to wait and see what happens."
    The BOJ, facing stubbornly low inflation, is in unusually
active discussions, with changes to its interest-rate targets
and stock-buying program on the table, people familiar with the
central bank's thinking told Reuters.
    The BOJ's current policy, adopted in mid-2016, consists
mainly of negative short-term interest rates, keeping the
10-year yield around zero percent and buying about 6 trillion
yen worth of stocks through exchange traded funds (ETFs).
    Expectations the central bank may unveil some measures at
its next monetary policy meeting on July 30 and 31 sent bond
yields jumping to 0.093 percent and the yen rallying
to a two-week high against the dollar and the euro.
    Some analysts raised doubts whether the Japanese
policymakers would agree to move away from an easy policy stance
as domestic inflation remains below their 2 percent target and
in the wake of last week's comments from U.S. President Donald
Trump, who criticized the U.S. dollar's strength.
    The yen reached a two-week peak at 110.74 yen per dollar
before easing to 111.27 yen, which was up 0.1 percent
from Friday, Reuters data showed.
    It strengthened to a two-week high at 129.85 yen per euro
before retreating to 130.33 yen, up 0.25 percent on the day. 

    CNBC reported on Friday that Trump was worried the Federal
Reserve will raise interest rates twice more this year. Trump
said the Fed's policy tightening and the strong dollar could
hurt the U.S. economy.
    Also underpinning support for the yen were Trump's comments
in a late-night Twitter message warning Iran from making more
threats against the United States.
    The Japanese currency is seen as a safe-haven due to
political worries.
    With short bets against the yen doubling to nearly 60,000
contracts in the latest weekly data, according to the Commodity
Futures Trading Commission, some traders expected more upside
for the yen in the short term.
    Positioning data suggested some signs of peaking in bullish
dollar bets after a recent buildup.
    Currency bid prices at 9:37AM (1337 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1710        $1.1718     -0.07%         -2.38%      +1.1750     +1.1688
 Dollar/Yen       JPY=        111.2900       111.3900    -0.09%         -1.22%      +111.5000   +110.7600
 Euro/Yen         EURJPY=     130.30         130.61      -0.24%         -3.61%      +130.7300   +129.8700
 Dollar/Swiss     CHF=        0.9917         0.9924      -0.07%         +1.79%      +0.9930     +0.9902
 Sterling/Dollar  GBP=        1.3119         1.3132      -0.10%         -2.91%      +1.3158     +1.3114
 Dollar/Canadian  CAD=        1.3150         1.3147      +0.02%         +4.56%      +1.3160     +1.3116
 Australian/Doll  AUD=        0.7383         0.7421      -0.51%         -5.36%      +0.7437     +0.7383
 Euro/Swiss       EURCHF=     1.1612         1.1632      -0.17%         -0.66%      +1.1644     +1.1604
 Euro/Sterling    EURGBP=     0.8923         0.8924      -0.01%         +0.45%      +0.8939     +0.8911
 NZ Dollar/Dolar  NZD=        0.6790         0.6807      -0.25%         -4.18%      +0.6824     +0.6781
 Dollar/Norway    NOK=        8.1698         8.1778      -0.10%         -0.45%      +8.1832     +8.1481
 Euro/Norway      EURNOK=     9.5659         9.5858      -0.21%         -2.87%      +9.5930     +9.5403
 Dollar/Sweden    SEK=        8.8464         8.8531      -0.15%         +7.86%      +8.8586     +8.8269
 Euro/Sweden      EURSEK=     10.3589        10.3740     -0.15%         +5.28%      +10.3983    +10.3400

 (Additional reporting by Saikat Chatterjee in London
Editing by Alison Williams and Jonathan Oatis)
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