Tuesday January 13, 2015 - 23:33:23 GMT
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Reuters - www.reuters.com
FOREX-Yen benefits from volatility, euro at 9-yr lows vs dlr
* Yen broadly firmer as investors seek safety
* Volatile U.S. stocks and oil prices hurt risk appetite
* Euro holds near fresh nine-year low vs USD
* European Court of Justice on ECB's bond-buying program next
By Ian Chua
SYDNEY, Jan 14 (Reuters) - The dollar neared one-month lows against the yen early on Wednesday as U.S. yields continued to shrink, but it scaled a nine-year peak on the euro as bolder stimulus from the European Central Bank seemed imminent.
The benchmark U.S. 10-year yield hit 20-month lows of 1.864 percent as plunging oil prices pulled down inflation globally and sparked much volatility on Wall Street.
The greenback fell as far as 117.52 yen, before steadying just under 118.00. Analysts at CitiFX said failure to make a meaningful run back to 119.00 seemed to spook many traders and inspired position cutting.
U.S. stocks swung from gains of more than 1 percent to losses of as much as 1 percent, with weak commodity prices keeping investors on edge. Brent crude was down nearly 5 percent for a second session, before staging a comeback.
Yet the dollar outperformed the euro on the back of more upbeat U.S. data and after two European Central Bank (ECB) officials fuelled expectations that the bank would launch a program to buy government bonds at its Jan. 22 policy meeting.
A report showed U.S. job openings approached a 14-year high in November as small business optimism jumped in December to its highest level in more than eight years.
The common currency fell as far as $1.1753 to reach a low not seen since December 2005. It last traded at $1.1775.
That helped the dollar index rise to within a whisker of a nine-year peak set last week.
Against the yen, the euro slumped to its lowest in over two months near 138.30. It has since clawed back to 138.80.
ECB member Benoit Coeure said the bank was in advanced discussions about whether to embark on a sovereign bond-buying programme, while Ewald Nowotny said it should decide sooner rather than later whether to start such purchases.
Market attention will now turn to the European Court of Justice (ECJ), which is expected to provide its non-binding opinion on the legality of the ECB's bond-buying program later on Wednesday.
"The decision does not have direct implications for asset purchases related to QE but an adverse or complicated recommendation could generate uncertainty in peripheral markets and limit the ECB's room for manoeuvre," analysts at BNP Paribas wrote in a note to clients.
Asia has little to offer in terms of market-moving economic news on Wednesday, leaving the focus on Asian equities and the ECJ. (Editing by Shri Navaratnam)
© Thomson Reuters 2015. All rights reserved.
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