FOREX-Yen keeps slim gains after BOJ eases as expected
* BOJ boosts asset buying by 10 trln yen
* It will review policy goal as wanted by new leader
* Tension over U.S. fiscal cliff helps yen, hurts euro
TOKYO, Dec 20 (Reuters) - The yen kept slim gains on Thursday after the Bank of Japan eased monetary policy as expected, increasing its asset purchases by 10 trillion yen and saying it would review its policy goal in a likely move towards adopting an inflation target.
After choppy moves, the dollar steadied at around 84.14 yen , almost the same level as before the BOJ's decision and down about 0.3 percent from late U.S. levels.
"Some people are selling the dollar/yen after the big event is over ahead of Christmas holidays," said Yunosuke Ikeda, senior FX strategist at Nomura Securities.
The dollar has gained about 6 percent against the yen in the past month or so, on speculation that Japan's new government will push the BOJ to take more aggressive easing steps.
In a move seen as an attempt to placate incoming prime minister Shinzo Abe, who has called for unlimited easing to achieve 2 percent inflation, the BOJ also said it would review its stance on price stability. At present, the BOJ has a goal of 1 percent inflation.
Still, all that had already been priced in when the dollar hit a 20-month high of 84.62 yen on Wednesday, market players said.
The euro stood at 111.32 yen, down about 0.3 percent from late U.S. levels and off a 16-month high of 112.59 yen hit on Wednesday.
The euro was little changed on the dollar at $1.3222, having slipped from an 8-month high of $1.33085 reached on Wednesday after German business confidence data beat market expectations.
In addition, a fall in southern European countries' bond yields also added to support for the euro earlier.
But it later gave up gains against the dollar while the yen also rebounded from multi-month lows as talks to resolve the U.S. fiscal impasse appeared to have taken a turn for the worse.
The Republicans announced plans to put an alternative tax plan to a vote in the House this week, prompting President Barack Obama to threaten to veto it should Congress approve, threatening to unravel progress made over the last week.
"Democrats and Republicans continued to try to frighten each other into gaining the upper hand. They mostly managed to bring in a mild wave of profit-taking in the markets," said Sebastien Galy, strategist at Societe Generale.
The Australian dollar took a hit as well, slipping to one-week lows of $1.0464 to be more than a full cent below last week's three-month peak.
Also under pressure, the New Zealand currency slid to a near two-week low around $0.8330 after data showed the economy slowed more than expected in the third quarter.
Gross domestic product expanded a mere 0.2 percent in the quarter, half of market expectations. There was a downward revision of second-quarter growth to 0.3 percent.
"It means there's more chance of a rate cut than a hike in 2013, but our base case remains steady policy for a long time to come," said Michael Turner, strategist, RBC Capital Markets.