* 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 slipped in Asian trade on
Thursday, moving further away from both a seven-week high
against the dollar and a 7-1/2-month high against the yen hit 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 look
for clues about whether ECB President Mario Draghi will show a
greater willingness to cut borrowing costs in the future.
"Ahead of the ECB meeting, the dollar and yen are being
bought back after the euro's rise,' said Teppei Ino, currency
analyst at the Bank of Tokyo-Mitsubishi UFJ.
The longer term outlook for the yen 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
"Polls today showed the LDP is expected to do well, which
suggests downside for the yen," Ino said. "Comments from the
BOJ's Nishimura yesterday suggested that the bank is considering
further easing even with the election outcome yet unknown."
BOJ Deputy Governor Kiyohiko Nishimura said on Wednesday the
central bank will debate whether its monetary easing in
September and October was enough to support the economy, which
may be undershooting its projections.
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.
"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.
Citi has reduced its underweight yen position primarily
because currency traders have become increasingly short since
The euro rose as high as $1.3127 on Wednesday on the
EBS trading platform, its highest since mid-October. It was last
buying $1.3056, down about 0.1 percent 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 also down about 0.1 percent against
the yen to 107.74 yen, after hitting a 7 1/2-month high of
107.95 yen on Wednesday.
The yen was slightly down against the dollar, which
last stood at 82.52 yen, well shy of its 7-1/2 month high of
82.84 yen hit last month.
The Australian dollar jumped against its U.S.
counterpart after a surprisingly strong jobs report prompted
investors to reduce expectations of further policy easing.
The Aussie hit a session high of $1.0480, close to a
two-month peak of $1.0491 hit last week, to last trade at
$1.0472, up about 0.2 percent on the day.
Net new job creation beat expectations and the jobless rate
dropped to a three-month low of 5.2 percent, confounding
expectations of a rise to 5.5 percent.
The Reserve Bank of Australia (RBA) reduced its key cash rate
by a quarter point this week, taking it back to a record low of
3 percent last seen during the global financial crisis.