FOREX-Yen steadier after hammering, still fragile

Mon Nov 19, 2012 4:13am IST

* Yen nurses heavy losses, near 7-mth low vs USD

* Aussie better bid after recent steep falls vs USD

* No major Asian data on Monday, BOJ meeting outcome due Tuesday

By Ian Chua

SYDNEY, Nov 19 (Reuters) - The yen was hovering near a seven-month low versus the dollar at the start of the week, as expectations of more stimulus by Japanese authorities after next month's election made holding the already low-yielding currency even less appealing.

The dollar bought 81.37 yen, little changed from late New York levels on Friday. Last week, the greenback rallied more than 2 percent and reached a peak around 81.47, a high not seen since late April.

The euro fetched 103.78 yen after climbing around 1.5 percent last week.

Investors dumped the yen after the government set elections for Dec. 16 and the leader of the opposition LDP party, which is expected to win the poll, called on the Bank of Japan to print "unlimited yen" and set interest rates at zero or below zero to boost the economy.

Traders said the sell-off has pushed the yen towards oversold territory and it could find a bit of support in the near term, but the medium-term outlook remained fragile.

"We think dovish rhetoric from the opposition LDP regarding monetary policy is likely to weigh on the currency into the election date," Yuki Sakasai, analyst at Barclays Capital, wrote in a note.

"The likelihood of more a dovish BOJ under an LDP-led government reduces the downside risk in USD/JPY and is a medium-term JPY negative, consistent with our 12-month forecast of 86."

The BOJ holds its policy meeting on Monday and Tuesday, but is not expected to do much.

"While we think further easing is in their pipeline, we do not expect them to announce it at Tuesday's meeting to avoid being perceived as politicizing the monetary policy ahead of the election," Barclays' Sakasai added.

Against the dollar, the euro stood at $1.2743, steady from late New York levels. The common currency found a floor at a two-month trough around $1.2661 last week after suffering a 3.6 percent-slide from mid-October on growing worries over Greece and the euro zone's economic outlook.

The single currency's immediate fortunes hinge on whether euro zone finance ministers can agree with the International Monetary Fund on a stop-gap financing programme for Greece. The ministers are due to meet on Tuesday.

"As the EU prepares a bundled aid package to avert a Greek default, headlines coming out of the meeting may fuel a relief rally in the euro, but we will maintain our bearish forecast for the single currency as the region faces a deepening recession," said David Song, currency analyst at DailyFX.

The Australian dollar was better bid in early Asian trade after two sessions of steep declines. It was at $1.0351 after falling as far as $1.0283 last Friday.

Traders said worries about the U.S. "fiscal cliff" of expiring tax cuts and spending reductions have receded slightly, helping underpin demand for the commodity currency.

Leading U.S. lawmakers expressed confidence on Sunday that they could reach a deal to avert the fiscal threat and President Barack Obama is due to hold further meetings with congressional leaders after Thanksgiving.

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared
People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

Wipro Q4 net profit beats estimates, rises 29 percent

Wipro posted a 29 percent rise in its fourth-quarter net profit, beating expectations, helped by increased IT spending by its customers. For the quarter ended March 31, the company said it earned 22.27 billion rupees compared with 17.29 billion rupees a year earlier.  Full Article | Full Coverage 

REUTERS SHOWCASE

Election 2014

Election 2014

India holds biggest day of voting with BJP gaining strength  Read | Full Coverage 

Market Eye

Market Eye

Sensex jumps 351 points, snaps 3-day losing streak  Full Article 

Insider Trading Case

Insider Trading Case

Ex-Goldman director Rajat Gupta to surrender June 17 in insider case.  Full Article 

Expansion Plans

Expansion Plans

Reliance Industries, HPCL Mittal plan refinery expansions.  Full Article 

S&P on India

S&P on India

S&P: India's ratings to depend on next govt econ, fiscal policies.  Full Article 

Ambitious Aim

Ambitious Aim

In green car race, Toyota adds muscle with fuel-cell launch.  Full Article 

Deal Talk

Deal Talk

Piramal to buy 20 percent stake in Shriram Capital for $334 million.  Full Article 

Bond Market

Bond Market

A star abroad, RBI boss riles bond traders at home  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage