* Yen recovers marginally, outlook cloudy
* Euro under pressure as worries about Greece weigh
* ECB's Weidmann says Greece would have to earn haircut
By Julie Haviv and Gertrude Chavez-Dreyfuss
NEW YORK, Nov 16 The yen recovered slightly on
Friday but posted its worst weekly performance against the
dollar since mid-February as expectations of aggressive monetary
easing from the Bank of Japan diminished the currency's appeal.
The euro, meanwhile, continued to struggle on persistent
concerns about Greece's fiscal problems and Europe's stagnant
The dollar, up about 2.2 percent versus the yen on the week,
remained in favor after Japanese Prime Minister Yoshihiko Noda
paved the way for a snap election on Dec. 16. The lower house of
parliament was dissolved on Friday.
Shinzo Abe, leader of the main opposition Liberal Democratic
Party and seen as likely to be Japan's next leader, called on
Thursday for the country's central bank to adopt interest rates
of zero or below to spur lending.
"The chaos with respect to Japan's snap election and the
lack of confidence in the government does not bode well for
dollar/yen," said Andres Bergero, vice president and chief
corporate trader at Bank of the West in San Ramon, California.
"But Japan, because it is resilient, will continue to
endeavor to move forward and they will get their house in
The dollar rose as high as 81.44 yen, just shy of the
7-1/2-month peak hit on Thursday. It last traded at 81.26, up
0.2 percent on the day, according to Reuters data.
Traders cited a large options barrier at 81.50 yen and
stop-loss orders placed above it.
Analysts also believe the dollar could rise toward 82 yen if
the Bank of Japan, which holds a policy meeting next week,
indicates it could ease further.
Price action, however, was subdued compared with Wednesday
and Thursday, when the dollar rallied about 1.1 percent each
"We have had quite a big move in the last couple of days so
we've probably seen the bulk of the early moves. The direction
will continue trending higher in coming months," said Colin
Asher, senior economist at Mizuho Corporate Bank.
"Some investors with short-term horizons are probably
looking to take profits after such big moves and some of the
longer-term investors are happy to sit on their positions on the
expectations that the rise will continue."
The yen, seen as a safe haven in times of uncertainty, could
pare losses should concerns about the U.S. "fiscal cliff" mount
and euro zone debt concerns deepen. But the dollar should also
benefit due to its safe-haven status.
If Congress and the White House cannot reach a debt and
deficit reduction deal by the end of the year it will unleash
massive spending cuts and tax increases that some believe have
the potential to tip the U.S. economy back into recession.
Congressional leaders said a meeting with President Obama on
Friday about the "fiscal cliff" was constructive.
Against the dollar, the euro fell for the first time in
three sessions, last trading down 0.3 percent at $1.2740
but holding above Tuesday's two-month low of $1.2660.
At current prices the euro was flat on the week, but down
1.9 percent so far in November.
A dispute among Greece's international lenders and weak
economic data out of the euro zone have done little to lift
market sentiment toward the euro.
Any new reduction of Greece's debt should only come as a
reward for Athens implementing the reforms it has agreed to,
European Central Bank Governing Council member Jens Weidmann
said on Friday.
The euro is expected to rally if word emerges that Spain is
requesting aid because it will set the stage for the European
Central Bank to start buying the country's bonds to lower its
The euro last traded down 0.4 percent at 103.36 yen
"The euro's decline today underscored how underlying
sentiment remained decidedly bearish after official figures this
week confirmed a return to recession for the broader euro
economy," said Joe Manimbo, senior market analyst at Western
Union Business Solutions in Washington.
"The region's seemingly endless debt crisis should keep a
low ceiling above the euro for the foreseeable future."