* 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 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
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
"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
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
"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
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
"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