* Dollar hits seven-month high vs yen on BoJ speculation
* Euro hits 6-1/2-month high versus yen
* Euro pressured by Moody's cut to French credit rating
* Euro zone finance ministers meet to discuss Greek aid
By Daniel Bases and Julie Haviv
NEW YORK, Nov 20 Expectations that Japan's
central bank will be pushed to move aggressively to try to
weaken the yen with looser monetary policy pulled the Japanese
currency to seven-month lows against the U.S. dollar on Tuesday
and nearly as low against the euro.
The euro's value against the greenback dropped modestly
after an expected downgrade to France's sovereign credit rating
late on Monday undercut optimism that euro zone ministers would
release funds needed for Greece to pay its debt.
U.S. Federal Reserve Chairman Ben Bernanke maintained his
guidance that U.S. monetary policy would stay loose with near
zero interest rates until at least mid-2015. He offered few
clues, however, on how the Fed might tweak its bond-purchase
program at the start of next year in its effort to spur more
borrowing at low interest rates.
The U.S. dollar was up for a fifth consecutive session
against the yen, rising 2.42 percent so far in November. This is
a reflection of expectations that elections on Dec. 16 will
return a new government in Tokyo, one that could push the Bank
of Japan toward more dramatic monetary stimulus.
The dollar rose to 81.75 yen, its highest level since
April 20. It last traded at 81.71, up 0.37 percent on the day,
according to Reuters data.
The euro hit a peak of 104.77 yen, its highest
point since May 4. It last traded at 104.70, up 0.38 percent on
"The whole political situation in Japan, that safe haven
status is rather questionable at this point," said Brian Kim,
currency strategist at RBS Securities in Stamford, Connecticut.
Kim referred to the long-time strategy of borrowing yen to
either park cash given its stability or use it as a funding
currency to buy higher yielding currencies and assets.
"And even if Bernanke comes out saying we are going to
potentially buy more assets, it is interesting how dollar/yen is
still holding up pretty well," Kim said.
The BOJ left interest rates unchanged at its latest policy
meeting earlier on Tuesday, as expected.
Shinzo Abe, the leader of Japan's opposition Liberal
Democratic Party and a frontrunner to win the election, has been
pushing hard for more aggressive BOJ moves on easing monetary
U.S. housing data gave the greenback some underpinning.
The U.S. Commerce Department reported housing starts rose to
their highest rate in more than four years in October. The data
followed robust reports on Monday on existing-home sales and
home builder sentiment.
FIXATED ON FINANCE MINISTERS
The euro, meanwhile, was flat against the dollar as
investors fixated on a euro zone finance ministers meeting on
The finance ministers are likely to approve the next tranche
of loans to Greece although the money is unlikely to be
disbursed before December and a deal on debt reduction may need
"Comments heading into today's meeting are generally
hopeful, and even if a formal decision to release funds is not
reached today, ministers could reach a consensus on the key
parameters of any deal," said Nick Bennenbroek, head of currency
strategy at Wells Fargo in New York.
"Accordingly, we see the euro zone finance ministers meeting
as a market-positive rather than market-negative event, with
some potential for the euro and other foreign currencies to move
The euro last traded at $1.2813, flat on the day,
paring earlier losses after ratings firm Moody's stripped France
of its Aaa status late on Monday.
Some analysts said the cut did not come as a surprise after
Standard & Poor's downgraded France in January, and the finance
ministers meeting could have a bigger impact on the euro if
policymakers fail to meet market expectations.
"The main driver in terms of the news flow was the downgrade
of France overnight but the knee-jerk reaction we saw overnight
was very short-lived," said Michael Sneyd, FX strategist at BNP
"That tells us the downgrade was not a surprise...The focus
today is the Eurogroup meeting and there we are looking for some
reasonable progress to be made for Greece's next aid tranche."
He said he was looking for progress on Greece to help the
euro consolidate above $1.28, adding it could reach $1.30 if
Congress and the White House agree to a deficit reduction deal
by the end of the year to avert $600 billion of tax hikes and
spending cuts, dubbed the "fiscal cliff".
The dollar, however, should benefit if the United States
hits the fiscal cliff due to its status as a safe-haven