November 14, 2012 / 12:56 PM / in 5 years

Dollar rises 1 percent versus yen to a session high

LONDON, Nov 14, (Reuters) - The yen extended losses against the dollar on Wednesday as speculators sold the currency on the prospect that the BoJ would be coerced into further monetary easing if an opposition-led government came into power in snap elections next month.

The dollar rose 1 percent on the day to 80.17 yen on the EBS trading platform after sustained buying by macro funds and some Swiss investors. The dollar was headed for its single biggest daily gain against the yen in more than three weeks.

Chances of an early election rose after Japan’s Prime Minister Yoshihiko Noda said on Wednesday he was open to dissolving the lower house of parliament later this week and to hold elections next month.

This is regarded as negative for the yen, as the most likely victor would be the main opposition Liberal Democratic Party. An LDP-led government is expected to put more pressure on the Bank of Japan to further ease monetary policy and that would weigh on the yen.

The euro also rose 1.2 percent against the yen to hit a session high of 102.10 yen.

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