2013.04.0201:43:46UTC+00Japan stocks dive while Aussie trades higher

Asian stocks were on disordered trading Tuesday with the Japanese market sharply underperforming due to a progressing yen, while the Australian market was modestly higher ahead of the Reserve Bank of Australia’s policy decision.

Japan’s Nikkei Stock Average was down 1.7% after declining by as much as 2.7% in early trading, diving to its rock bottom level since March 6.

“The selloff is more due to the strong yen than an overheated market per se,” said Tatsunori Kawai, chief Strategist at kabu.com. “Heading into (fiscal year) end earnings reporting season, investors are looking for the dollar to hold around at least the Y95 mark. The Nikkei could keep correcting to the 11,300 level within the month if this doesn’t happen.”

Japanese exporters were declining with technology stocks bearing the brunt of selling. Nikon gave up 4.6%, Canon missed 2.8% and Tokyo Electron trading 3.8% lesser.

The yen boost up versus the U.S. dollar in the lead up to the Bank of Japan’s much awaited policy meeting later this week as investors contemplates about whether or not the central bank will be able to reach the market’s easing expectations. The dollar dropped below Y93.00 in early trading for the first time since March 6, and was recently at Y93.06 compared with Y93.21 late Monday in New York.

In Sydney, the S&P/ASX 200 was move a bit with 0.2%, as investors anticipate the Reserve Bank of Australia’s policy decision. With the central bank widely expected to hold interest rates at 3.0%, focus is on the accompanying policy statement for any signs of a change in its view.

“(Focus) will be on the statement’s wording, with most attention on the final paragraph. For the past two months the RBA has judged that the inflation outlook is low enough to ‘afford scope to ease policy further, should that be necessary to support demand.’ A minority of pundits has suggested that the RBA is so firmly on hold that it will remove this phrase today. If it does so, AUD/USD would probably finally break through 1.0500,” Westpac’s Sean Callow writes in a note to clients.

The Aussie dollar was sitting at US$1.0437 in comparison with US$1.0422 late Monday in New York. While, South Korea’s Kospi Composite was off track with 0.1%.