Dollar gains vs yen on weak Japan data; focus on Ukraine

The dollar rose to a two-week high against the yen on Monday after Japan posted a record trade deficit in the fiscal year ended in March, though tensions in Ukraine were likely to limit losses on the safe-haven Japanese currency.

The greenback has gained for seven straight sessions versus the yen, with the euro also strengthening to a two-week peak against the Japanese unit in light holiday trading. Many of the European markets are closed due to the Easter Monday holiday.

The yen slid after data showed a much weaker-than-expected rise of 1.8 percent in Japan exports in March from a year earlier, compared with forecasts for a 6.3 percent gain.

The country's trade balance stood at a deficit of 1.446 trillion yen ($14.14 billion) in March, against a shortfall of 1.070 trillion yen expected, after logging a record trade gap of 2.79 trillion yen in January. That marked a record 21-month run of deficits.


The dollar traded just shy of 103 yen, its strongest level since April 8, up 0.2 percent on the day

Still, losses in the yen could be tempered by fresh tensions in Ukraine. An agreement reached last week to avert wider conflict in Ukraine faltered as the new week began, with pro-Moscow separatist gunmen showing no sign of surrendering government buildings they have seized.

In addition, at least three people were killed in a gunfight early on Sunday near a Ukrainian city controlled by pro-Russian separatists, shaking a fragile international peace accord.

Geopolitical uncertainty tends to support safe-haven currencies such as the yen.

In terms of flows, a trader for a Japanese bank in Singapore said there was talk of dollar-buying against the yen by Japanese banks.

The U.S. unit also edged higher against a basket of major currencies, with the dollar index adding about 0.1 percent to 79.874.

The euro rose 0.2 percent against its Japanese counterpart to near 142 yen, after touching a two-week high of 141.82 earlier on Monday.

Against the greenback, the euro was steady above $1.38.

The euro hit a 2-1/2-year high near $1.40 last month, prompting European Central Bank officials to express their concern that a strengthening currency could damage the euro zone's nascent recovery.

In the week ahead, the dollar could take cues from U.S. housing related-data, as well as a reading on durable goods orders. The durable goods orders report on Thursday is expected to show a 2.0 percent increase in overall orders and a 1.5 percent rise in orders for core capital goods.

--By Reuters