* Euro nurses loss after drop from 7-week peak vs dollar
* Yen undermined in longer term by election expectations
By Lisa Twaronite
TOKYO, Dec 6 The euro held its ground in early
Asian trade on Thursday after slipping from a seven-week high
against the dollar in the previous session, as investors awaited
a European Central Bank policy meeting.
The ECB is widely expected to keep rates on hold at 0.75
percent at its policy meeting on Thursday. Investors will be
looking for clues to whether ECB President Mario Draghi will
show a greater willingness to cut borrowing costs in the future.
The yen was also slightly higher, but was undermined by
expectations of pressure on the Bank of Japan to take further
easing steps following the election on Dec. 16. The latest
Japanese polls on Thursday showed Shinzo Abe's opposition
Liberal Democratic Party on track to secure a majority.
"Politically, LDP leader Abe has softened his aggressive
stance on monetary policy. However, we remain bearish on JPY
over the medium term, and will look to increase our JPY short
once positioning looks less stretched," analysts at Citigroup
wrote in a note to clients.
For now, Citi reduced its underweight yen position primarily
because currency traders have become increasingly short since
The expected change of government and prospects of drastic
easing will weaken the safe-haven yen further over the next
year, according to the latest Reuters poll for December.
The euro rose to as high as $1.3127 on Wednesday the
EBS trading platform, its highest level since mid-October. It
was last buying $1.3068, up slightly from late U.S. levels.
The euro will probably hold its value against the dollar
over the next month after rallying over the last few weeks, but
a persistently weak euro zone economy will put it under pressure
next year, according to the latest Reuters poll.
The euro was nearly flat against the yen, after
hitting a 7 1/2-month high of 107.95 yen on Wednesday.
The yen was also nearly flat against the dollar,
which last stood at 82.44 yen, well shy of its 7-1/2 month high
of 82.84 yen hit last month.