FOREX-Yen plunges to multimonth lows, euro steady vs dollar
* Dollar hits seven-month high vs yen on BoJ speculation
* Euro hits 6-1/2 month high versus yen
* Euro under pressure after French rating cut
* Euro zone finance ministers meet to discuss Greek aid
By Julie Haviv
NEW YORK, Nov 20 (Reuters) - The yen skidded to a seven-month low versus the dollar and a 6-1/2 month low versus the euro on Tuesday on expectations that the Bank of Japan will soon embark on more aggressive policy action.
The euro, meanwhile, dipped against the dollar as a downgrade of France's credit rating undercut optimism that euro zone ministers would release funds needed for Greece to pay off its debtholders.
Against the yen, the dollar gained in value for a fifth straight session, appreciating 2.4 percent so far in November, a reflection of expectations that a new Japanese government after a Dec. 16 election could push the Bank of Japan toward more forceful monetary stimulus.
The BoJ, however, held off from additional monetary stimulus at its latest policy meeting, as expected, after having eased policy in September and October.
"Today's price action in the yen crosses is more forward-looking in nature because the BoJ meeting was really a non-event," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington D.C.
"What we are looking at are expectations for increasing political pressure on the BoJ and that it will continue to ease in the future," he said. "We could see easing in December and into months in 2013."
That stance stems from recent comments made by Shinzo Abe, the leader of Japan's opposition Liberal Democratic Party and a frontrunner to win the election.
The dollar rose to 81.75 yen, its highest since April 20. It last traded at 81.74, up 0.4 percent on the day, according to Reuters data.
The euro hit a peak of 104.77 yen, its highest since May 4. It last traded at 104.74, up 0.4 percent on the day.
"Recent positive U.S. data on the housing market has also helped the dollar versus the yen as this currency pair is the most sensitive to the tone of economic data," Esiner said.
U.S. housing starts rose to their highest rate in more than four years in October. The data followed robust reports on Monday on existing-home sales and home builder sentiment.
FIXATED ON FINANCE MINISTERS
The euro, meanwhile, was flat against the dollar as investors fixated on a euro zone finance ministers meeting.
The finance ministers are likely to approve the next tranche of loans to Greece although the money is unlikely to be disbursed before December and a deal on debt reduction may need further talks.
"Comments heading into today's meeting are generally hopeful, and even if a formal decision to release funds is not reached today, ministers could reach a consensus on the key parameters of any deal," said Nick Bennenbroek, head of currency strategy at Wells Fargo in New York.
"Accordingly, we see the euro zone finance ministers meeting as a market-positive rather than market-negative event, with some potential for the euro and other foreign currencies to move higher today."
The euro last traded at $1.2814, flat on the day, paring earlier losses after ratings firm Moody's stripped France of its triple-A status late on Monday.
Some analysts said the cut did not come as a surprise after Standard & Poor's downgraded France in January, and the finance ministers meeting could have a bigger impact on the euro if policymakers fail to meet market expectations.
"The main driver in terms of the news flow was the downgrade of France overnight but the knee-jerk reaction we saw overnight was very short lived," said Michael Sneyd, FX strategist at BNP Paribas.
"That tells us the downgrade was not a surprise...The focus today is the Eurogroup meeting and there we are looking for some reasonable progress to be made for Greece's next aid tranche."
He said he was looking for progress on Greece to help the euro consolidate above $1.28, adding it could reach $1.30 if Congress and the White House agree to a deficit reduction deal by the end of the year to avert $600 billion of tax hikes and spending cuts, dubbed the "fiscal cliff".
The dollar, however, should benefit if the United States hits the fiscal cliff due to its status as a safe-haven currency.
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