* Aussie remains out of favour
* Some BOJ members uneasy about feasibility of inflation
* US and UK markets closed for holidays
By Sophie Knight
TOKYO, May 27 The dollar dipped against the yen
in early Asian trade on Monday after marking its worst week in a
year on Friday, as volatility in Japanese stocks and bonds
pulled it well away from its highest level in 4-1/2 years.
The greenback last bought 101.13 yen, dropping 0.1
percent from Friday, when it scraped a trough of 100.68 on
Friday and closed 1.9 percent down on the week.
On Thursday, the Nikkei was jolted off 5-1/2 year highs as
investors scrambled for safety in Japanese bonds after poor
Chinese trade data, and after the 10-year Japanese government
bond yield rose to 1 percent, its highest in over a year.
Bank of Japan Governor Haruhiko Kuroda said over the weekend
that the country's financial institutions have sufficient
buffers against losses they may incur from rises in bond yields,
as long as market moves are driven by prospects of an economic
On Monday, BOJ minutes showed that some members said the
central bank should continue to seek ways to prevent falling
liquidity in the Japanese government bond market, while others
said its 2 percent inflation target may be hard to reach in two
Yen buying pressure at the end of last week helped to pause
the dollar's broad gains over the last three weeks that were
driven by expectations that the U.S. Federal Reserve may wind
down its bond-buying programme earlier than scheduled.
"Expectations that the Fed will reduce QE3 should be
positive for the dollar, but if stocks continue to fall it will
likely be a negative for the dollar-yen," said Yoshio Takahashi,
currency strategist at Barclays in Tokyo.
On Monday, the dollar index dipped 0.1 percent after
dropping 0.7 percent last week, as Fed Chairman Ben Bernanke
told Congress that the central bank will not exit its easing
programme unless the economy showed further signs of
A quiet day of trading is expected as U.S. markets are
closed for Memorial Day, while the U.K. is closed for a bank
The euro was steady at $1.2926 after rising 0.7
percent last week, its first weekly gain in three weeks,
supported by signs of improvement in German business morale on
The next area of resistance for the common currency gains
lies around its 20-day moving average at $1.2992.
The Australian dollar, meanwhile, continued its forlorn
trundle downwards, losing 0.1 percent to $0.9637 on Monday
morning. It has already skidded 7 percent this month,
weighed on by concerns about lower commodity prices as Chinese
growth slows, as well as a surprise rate cut by the central
If the Aussie remains more than 6.6 percent down by Friday,
this would mark its worth month since September 2011, when it
fell 9.7 percent.