* Yen back in the doldrums, to end 2012 sharply lower
* More BOJ action seen early next year, Japan data next week
* U.S. fiscal talks still an event risk
* Markets subdued as year-end lull sets in
By Ian Chua
SYDNEY, Dec 21 The yen struggled near
multi-month lows against the greenback and euro on Friday, on
track to clinch the title of worst major performing currency of
2012 as the last full trading week of the year draws to a close.
The yen stayed under pressure after the Bank of Japan
expanded its asset-buying programme by an expected 10 trillion
yen ($1 trillion) on Thursday and signalled more action ahead
including setting a higher inflation target.
The dollar was at 84.36 yen, still within easy reach
of a 20-month peak around 84.62 set earlier in the week. The
euro traded at 111.78 yen, near a 16-month high of
112.59. So far this year, the dollar has risen some 9 percent on
the yen, while the single currency was up more than 12 percent.
Traders expect the yen to remain pinned down, although
further significant downside was unlikely given that markets
already hold very bearish positions in the currency.
"The Japanese data calendar is heavy over the final week of
the year, including November CPI and industrial output. Although
soft data could put pressure on the yen, we believe that
overextended positioning suggests only limited scope for further
downside," said BNP Paribas analyst Vassili Serebriakov.
Traders said talks to avoid the 'fiscal cliff' of government
spending cuts and tax hikes in the United States remained a key
risk for markets in the closing days of the year.
But investors remained ever hopeful that a deal to avert the
fiscal cliff will be struck, and even more confident that the
Mayan apocalypse will prove to be just another myth.
All that drama has helped keep the dollar index from
falling below the September trough of 78.601 so far, although it
remained precariously close at 79.214.
Despite the euro zone's own debt problems, the euro was on
track to end the year some 2 percent higher against the
greenback. It was at $1.3251, near an eight-month high
around $1.3309 set this week.
Recent positive developments in the euro area included a
disbursement of another tranche of long-delayed aid to Greece,
and a rise in morale at German businesses that boosted hopes
Europe's largest economy will bounce back quickly after a weak
end to 2012.
The Australian dollar was also up some 2.5 percent on the
greenback this year, despite four separate rate cuts. It was at
$1.0482, having peaked at $1.0857 back in February.