Bulls drove Japanese shares to nearly five-year highs as yen bears clawed at the symbolic 100 yen/dollar door on Monday, encouraged by the Group of 20 gatherings in Washington all but endorsing the Bank of Japan's bold reflationary policies.
Asian shares inched higher while oil and gold rebounded after last week's a sharp sell-off last week but investors remained wary of volatility given uncertainty global growth prospects.
In a communique after a two-day meeting on Friday, the G20 simply said it would be "mindful" of possible side-effects from extended periods of monetary stimulus, without singling out Japan as some had feared.
Japan's central bank governor and finance minister reiterated on Monday that the G20 countries accepted that Japan's monetary easing is not aimed at weakening the yen.
"Following the G20, players feel comfortable selling the yen further, and it is just a matter of timing when the symbolic 100 yen level is hit," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo.
The dollar traded at 99.79 yen, after earlier hitting 99.89, just below a four-year high of 99.95 reached on April 11. If heavy option barriers lined up around 100 yen to the dollar were to be broken, the dollar had more upside as it would trigger stop-loss buying and target a 2009 high of 101.45 yen, he said.
With few major events or news scheduled during the session in Asia, market focus was largely on when the would top 100 yen to renew its four-year peak.
With the euro zone's economy looking fragile, the US dollar looked set to strengthen relative to other major currencies. How far that would go depended on US economic data rather than factors from Japan, Credit Agricole's Saito added.
Data on Friday showed currency speculators raised their bets against the yen in the week ended April 16, while lifting positions in favour of the US dollar.
Japan's Nikkei stock average surged 2 percent to nearly five-year highs, cheering the G20 outcome as a clear trend for the yen's weakness improves prospects for Japanese corporate earnings.
The rest of Asia, however, fared far less well, with the MSCI's broadest index of Asia-Pacific shares outside Japan inching up 0.1 percent after ending a volatile week with a 0.5 percent drop. Global equities markets and commodities rebounded late last week after tumbling sharply on concerns about growth slowdown in the United States and China.
Australian shares added 0.2 percent while South Korean shares were up 0.1 percent.
"Investors are heading into this week cautiously, as the market lacks a clear direction for the moment," said Biyi Cheng, head of dealing Asia Pacific at City Index in Sydney.
The stock market in South Korea, which had been critical of the yen's weakening, appeared to take the G20 outcome in its stride and instead focused on domestic earnings.
"There's no serious upward momentum, considering earnings prospects are muted for most companies," said Park Heon-seok, an analyst at Dongbu Securities, of Seoul shares.
FISCAL STRAINS HURT GROWTH
Finance leaders of the G20 advanced and emerging economies also edged away from a long-running drive toward official austerity in rich nations, rejecting the idea of setting hard targets for reducing national debt in a sign of worries over a sluggish global recovery.
That concern was highlighted on Saturday when the International Monetary Fund's steering committee said at the conclusion of the world lender's spring meeting that monetary policy alone was not enough to restore confidence in the shaky global economy. They urged countries to take additional steps to reinvigorate growth and create jobs.
Commodities recovered some ground after last week's sharp sell-off, but markets may remain vulnerable ahead of China's HSBC flash manufacturing PMI for April due on Tuesday.
US crude rose 0.6 percent to USD 88.50 a barrel and Brent crude rose 0.5 percent to recover USD 100.
London copper fell 0.9 percent to USD 6,930 a tonne.
Gold rose more than 1 percent, pushing cash gold up as high as USD 1,421 an ounce, well above its lowest in more than two years of USD 1,321.35 touched last week, and US gold futures rose as high as USD 1,421.30. But sentiment remains shaky after steady outflows from exchange-traded funds trimmed holdings to their lowest in three years.
The euro steadied around USD 1.3078, but traders expected the single currency to face pressure as a slew of euro zone economic reports will be released this week, including consumer confidence later on Monday and purchasing managers index on Tuesday.
Italy's re-election of a president on Saturday has raised the prospect of an end to the two months of political stalemate that followed a general election, helping to support the euro.
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