* Yen nurses heavy losses, near 7-mth low vs USD
* Aussie better bid after recent steep falls vs USD
* No major Asian data on Monday, BOJ meeting outcome due Tuesday
By Ian Chua
SYDNEY, Nov 19 (Reuters) - The yen was hovering near a seven-month low versus the dollar at the start of the week, as expectations of more stimulus by Japanese authorities after next month’s election made holding the already low-yielding currency even less appealing.
The dollar bought 81.37 yen, little changed from late New York levels on Friday. Last week, the greenback rallied more than 2 percent and reached a peak around 81.47, a high not seen since late April.
The euro fetched 103.78 yen after climbing around 1.5 percent last week.
Investors dumped the yen after the government set elections for Dec. 16 and the leader of the opposition LDP party, which is expected to win the poll, called on the Bank of Japan to print “unlimited yen” and set interest rates at zero or below zero to boost the economy.
Traders said the sell-off has pushed the yen towards oversold territory and it could find a bit of support in the near term, but the medium-term outlook remained fragile.
“We think dovish rhetoric from the opposition LDP regarding monetary policy is likely to weigh on the currency into the election date,” Yuki Sakasai, analyst at Barclays Capital, wrote in a note.
“The likelihood of more a dovish BOJ under an LDP-led government reduces the downside risk in USD/JPY and is a medium-term JPY negative, consistent with our 12-month forecast of 86.”
The BOJ holds its policy meeting on Monday and Tuesday, but is not expected to do much.
“While we think further easing is in their pipeline, we do not expect them to announce it at Tuesday’s meeting to avoid being perceived as politicizing the monetary policy ahead of the election,” Barclays’ Sakasai added.
Against the dollar, the euro stood at $1.2743, steady from late New York levels. The common currency found a floor at a two-month trough around $1.2661 last week after suffering a 3.6 percent-slide from mid-October on growing worries over Greece and the euro zone’s economic outlook.
The single currency’s immediate fortunes hinge on whether euro zone finance ministers can agree with the International Monetary Fund on a stop-gap financing programme for Greece. The ministers are due to meet on Tuesday.
“As the EU prepares a bundled aid package to avert a Greek default, headlines coming out of the meeting may fuel a relief rally in the euro, but we will maintain our bearish forecast for the single currency as the region faces a deepening recession,” said David Song, currency analyst at DailyFX.
The Australian dollar was better bid in early Asian trade after two sessions of steep declines. It was at $1.0351 after falling as far as $1.0283 last Friday.
Traders said worries about the U.S. “fiscal cliff” of expiring tax cuts and spending reductions have receded slightly, helping underpin demand for the commodity currency.
Leading U.S. lawmakers expressed confidence on Sunday that they could reach a deal to avert the fiscal threat and President Barack Obama is due to hold further meetings with congressional leaders after Thanksgiving.