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SYDNEY (Reuters) - The yen held near one-month highs against the dollar early in Asia on Thursday, with investors adopting a cautious stance as they waited to see just how aggressive the Bank of Japan will be in tackling deflation.
Having talked up expectations for bold measures, including an immediate start to its open-ended bond buying program, the BOJ will be hard pressed to surprise markets.
Given the BOJ's track record for under delivering, the market has already trimmed back short yen positions just in case. That is one reason the yen has rallied a little in the past three weeks, coming off multi-year troughs against the dollar and euro.
The greenback was last at 93.05 yen, having drifted down from a session high of 93.69 on Wednesday. It has lost nearly 4 percent from a 3-1/2 year peak of 96.71 set a few weeks ago. Initial support is seen around 92.55, the 23.6 percent retracement of its Nov-March rally.
Even should the BOJ disappoint at this meeting, Nomura analysts caution that Governor Haruhiko Kuroda is very likely to try to keep expectations high for the next meeting in three weeks.
The outcome of the meeting will be announced between 11:30 p.m.-1:30 a.m. EDT, followed by Kuroda's media briefing at around 2:30 a.m. EDT.
"Thus, the press conference is likely to be a good timing of dip buying, if the market is disappointed by the announcement," Nomura analysts wrote in a client note.
Also in focus are policy meetings of the European Central Bank and Bank of England.
Both central banks are not expected to deliver any new stimulus for now, although the ECB is likely to try and calm markets by pledging to keep the banking system lubricated after Cyprus's brush with financial meltdown.
Still the risk of any surprises, such as an interest rate cut from the ECB or a restart of the BOE's bond-buying program, is keeping investors wary of the euro and sterling.
The euro was at $1.2845, not far from a four-month trough of $1.2750 plumbed on March 27. Sterling was at $1.5128, having dipped to a two-week low of $1.5075.
With the major event risks looming, high-flying commodity currencies took a backseat. The Aussie dollar was at $1.0458 after a second attempt to break above $1.0500 failed.
Any upside surprises in Australia's retail trade data due at 0030 GMT could put the Aussie dollar on track for a third try at $1.0500. Due at 0030 GMT, retail sales are expected to increase 0.3 percent in February.
Editing by Wayne Cole