Asian stocks to lead the way to year's end, Fed seen pulling back - Reuters Poll. Full Article
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FOREX-Yen stays on backfoot, central banks eyed this week
* Yen wallows at multi-year lows vs USD & EUR
* Euro still favoured among G3, but ECB event-risk looms
* RBA, BOE also in focus this week
By Ian Chua
SYDNEY, Feb 4 (Reuters) - The yen started the new week with a nagging problem, it remained the currency of choice to sell with the Bank of Japan seen under the most pressure among major central banks to ease policy aggressively.
The dollar bought 92.80, having scaled a 2-1/2 year high of 92.97 on Friday. It pierced through resistance around 91.60, putting it on track to retest 95.00, a level that had capped it in 2010.
The euro also extended its rally to 126.97, nearing its 2010 peak of 127.46. It was last at 126.79.
Only 5 weeks into the year and the common currency is already up some 2 percent against the yen. The dollar is nearly 7 percent higher, following a rise of about 13 percent for 2012.
"The Japanese authorities have committed themselves to a 2 percent inflation target, but the market perceptions about economic growth and inflation expectations remain subdued," analysts at Barclays Capital wrote in a note.
"We therefore believe that the authorities will continue to use the JPY as a tool to boost actual inflation, thus helping to validate the new 2 percent target."
Data last Friday showed currency speculators added bearish bets on the yen, while trimming bets against the greenback.
Among the G3 currencies, the euro has been the standout performer, having notched up gains of 3.5 percent on the greenback so far in 2013 as well.
It was last at $1.3647 after climbing as high as $1.3710 on Friday, a level not seen since late 2011.
Data last Friday showing euro zone factories had their best month in nearly a year during January underscored optimism for the euro.
U.S. jobs data was mixed with employment growing modestly in January. Encouragingly, job gains in the previous two months were larger than first reported.
Part of the reason for the euro's outperformance is the European Central Bank's relatively upbeat view on the euro zone economy. Yet the strength of the currency is sure to sit uncomfortably with the ECB, which has an opportunity at Thursday's meeting to make a clear statement about that.
Still, any attempts by ECB President Mario Draghi to talk down the euro will likely only have a temporary effect, analysts said.
The Bank of England also meets Thursday and should maintain a dovish tone. This will give no reprieve to sterling, which has slumped to 15-month lows on the euro. The common currency bought 86.91 pence, having risen as high as 87.16 pence.
Commodity currencies have somewhat faded into the background, although the New Zealand dollar has been quietly grinding higher thanks to recent hawkish-sounding comments from the Reserve Bank of New Zealand.
The kiwi drifted up to a 16-month high on the greenback at $0.8493 and hit a 2-1/2 year peak on the Australian dollar, which slid to NZ$1.2274.
The Aussie is set to remain on the backfoot with the Reserve Bank of Australia (RBA) likely to keep the door open to more rate cuts this week.
While the RBA is not expected to ease at its first meeting of the year on Tuesday, analysts expect it will eventually be forced to do so later in the year given many parts of the economy are still struggling with a strong currency.
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