Dollar flat against yen in Asia, Japan polls eyed
TOKYO — The dollar was flat against the yen in Asia Thursday after climbing in New York on hopes Japanese elections next month will the opposition win, and pave the way for further central bank easing.
In Tokyo, the dollar bought 80.24 yen, compared with 80.23 yen in New York late Wednesday where the greenback had climbed above 80 yen in earlier trade.
The euro was slightly weaker on the Japanese currency at 102.17 yen, from 102.19 yen, while the European unit bought $1.2737, against $1.2734.
On Wednesday, a senior governing party official confirmed that Japan will hold a general election on December 16, ending months of speculation.
But opinion polls point to dwindling support for Prime Minister Yoshihiko Noda as he heads into a face-off with Shinzo Abe, a conservative and former prime minister.
An Abe victory is seen as a yen-selling factor given his support for further easing by the Bank of Japan, which tends to weigh on the currency.
“Speculative yen-selling will be built on expectations of active monetary easing by the bank of Japan,” said Hiromichi Shirakawa, research analyst at Credit Suisse.
“But it may be too early to expect the trend of a weak yen will last long,” he added.
The yen has been seen as safe bet by dealers at a time of economic uncertainty, with fiscal turmoil in Europe and the unsteady US economic recovery.
There are also rising fears that the United States could fall off a fiscal cliff of tax hikes and spending cuts if a deal between bitterly divided Republicans and Democrats is not reached before January 1.
Those worries were compounded Wednesday when President Barack Obama challenged Republicans to accept tax hikes for the rich as part of any deal aimed at averting a crisis.
“Once the frenzy over the news from Japan cools, dollar-yen selling pressure could strengthen as the market returns its focus to US fundamentals,” Junichi Ishikawa, forex analyst at IG Market Securities in Tokyo, told Dow Jones Newswires.
Risk aversion also set in owing to Middle East tensions after an Israeli air strike in Gaza Wednesday that killed a Hamas military chief, reigniting tensions in the region.
And eurozone fears were stoked by huge anti-austerity strikes in Europe, while Greece and Portugal released another set of weak growth data.
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