* 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
By Ian Chua
SYDNEY, Nov 19 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
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.