SYDNEY/WELLINGTON: The Australian and New Zealand dollars shot to four-and-a-half year highs against the yen on Friday as the Bank of Japan's pledge to massively expand its balance sheet send the Japanese currency into a nosedive.
The Aussie jumps 3.3 percent to 100.46 yen, breaking the 100 yen barrier for the first time since August 2008. It was the largest one-day gain in two years. Next target is the 103.73 peak from July 2008.
The kiwi vaulted 3.6 pct to 81.10 yen, having hit a high of 81.17 that was last seen in July 2008.
The BOJ far surpassed expectations with its plan to expand massively the monetary base and sharply increase purchases of Japanese government debt.
With JGB yields cratering, analysts assume much of the new money will be used by Japanese investors to buy higher yielding assets overseas, and Aussie and NZ bonds are among the highest yielding in the developed world.
The Australian dollar seen as a good currency to express yen weakness in carry trades. Nomura Securities says it's buying the Aussie against the yen, targeting a move to 105 in two to three months.
The euro rose even further on the yen as the market was caught badly short on that cross. Euro up no less than 4.3 pct at 124.64 yen, which in turn saw it rebound against the Aussie to A$1.2391.
Against the US dollar, the Aussie a touch softer at $1.0436, from $1.0455 in Thursday's late local trade. It ranged $1.0386 to $1.0474 overnight, and hit a 10-week high of $1.0498 on Wednesday.
Aussie resistance initially seen at $1.0480 ahead of a more formidable $1.0500 would open the way to $1.0599, the year's high. Support seen at $1.0410, the 100-day moving average, and below that $1.0400.
The New Zealand dollar fares a little better managing $0.8420, from $0.8427, after ranging $0.8364 to $0.8428 overnight.
Kiwi likely to find support at $0.8400 with the six-week high around $0.8450 touched on Wednesday the first hurdle higher.
The US dollar and euro post their biggest daily percentage gains on the yen since late 2008 after the BoJ's ambitious anti-deflation programme.
Data showing weaker-than-expected growth in US private-sector employment and initial jobless claims at four-month highs last week has fuelled worries the labour market is losing momentum.
All eyes on non-farm payrolls data later on Friday, with expectations that 200,000 jobs were added last month, leaving the jobless rate steady at 7.7 percent.
European Central Bank held policy as expected, but President Mario Draghi says the bank is ready to act if growth continues to languish. He also affirms a commitment to keeping the euro zone intact and says the Cyprus bailout is not a "template" for future rescues.
The Bank of England also holds policy steady which sees the pound climb of multi-year lows, up 0.9 percent on the Aussie and 0.6 percent on the kiwi.
Strong Australian retail sales and building approvals in February offered a clear sign consumer demand is responding to lower interest rates, leading to a further trimming of expectations for future rate cuts.
Interbank futures lower, while swap rates showed the market pricing in around 16 basis points of rate cuts over the next 12 months, compared to 20 just before the data.
Australian government bonds futures nudge higher. The three-year contract up 0.03 points to 97.150, while the 10-year contract gains 0.035 points at 96.625.
New Zealand government bonds edge up, sending yields 3 basis points lower.
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
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