The yen was under pressure in Asia Wednesday as markets bet on more easing measures after a Bank of Japan (BoJ) policy meeting, while the euro won support from a batch of positive eurozone news.
The dollar was quoted at 84.30 yen in Tokyo morning trade, from 84.28 yen in New York Tuesday afternoon, while the euro also gained to 111.50 yen, from 111.47 yen. The European single currency bought $1.3229, from $1.3225 thanks to a strong Spanish bond auction and upgrade to Greece’s credit rating. The dollar was likely to move in a narrow range as the market awaits the conclusion of a two-day Bank of Japan policy meeting on Thursday, said Daisaku Ueno, senior forex strategist at Mitsubishi UFJ Morgan Stanley. The greenback has won a measure of support on rising optimism of a deal to avert the US fiscal cliff. Japan’s incoming prime minister Shinzo Abe, whose Liberal Democratic Party swept to an electoral victory in national elections at the weekend, has vowed to step up pressure on the central bank for more aggressive policy action to boost the economy. The hawkish LDP head wants the bank to set a two percent inflation target as part of a goal to drag Japan out of the deflationary spiral that has haunted it for years.
The BoJ “cannot ignore the popular support for Mr Abe”, Ueno told Dow Jones Newswires. “It’s likely the central bank will implement some form of easing.”