* Yen jumps after Japanese official says it has weakened
* Other major currencies subdued ahead of key events this
* BOJ meeting, Bernanke's Congressional testimony in focus
By Sophie Knight and Ian Chua
TOKYO/SYDNEY, May 20 The yen bounced off a
4-1/2-year low against the dollar on Monday after Japan's
economy minister suggested the government might be satisfied
with its current level, following a sharp decline over the past
The dollar was down 0.4 percent at 102.81, having
slid about 1 percent to 102.00. The euro plumbed 131.05
from 132.45 late in New York, before steadying at
131.95. Support is seen around 131.10, with resistance above
Just last Friday, the dollar reached a 4-1/2-year high of
103.32, while the euro hovered near a 3-1/2-year peak of 132.78.
The turnaround came after Japan's economy minister, Akira
Amari, said the yen's excessive strength has largely corrected
and further weakness in the currency could damage Japan's
"The moves are due to the dollar's strength rather than the
yen's weakness, so there's more focus on what the Fed does or
says than statements from Japanese politicians," said Yoshio
Takahashi, currency strategist at Barclays in Tokyo.
"Even if they think the yen has weakened enough they have no
way of stopping it."
Last month, the Bank of Japan unleashed the world's most
intense burst of stimulus, promising to inject $1.4 trillion
into the economy in less than two years to meet its pledge of
achieving 2 percent inflation in roughly two years.
At its May 21-22 policy meeting, the BOJ is expected to hold
off on easing policy further, but may fine-tune its market
operations to stem recent volatility in the bond market.
In contrast, expectations are rising that the the Federal
Reserve will wind down its Quantitative Easing (QE) programme
some time this year, after a flurry of upbeat U.S. data in the
past few weeks has shown an improving economic landscape.
Data out on Friday showed currency speculators had increased
their bets in favour of the U.S. dollar to the highest in 11
months in the week ended May 14.
Dollar bulls, however, will be keeping a close eye on
Bernanke's testimony to Congress later in the week, given that
he has showed no signs of wanting to taper the Fed's
bond-buying, or QE programme any time soon.
"We expect Bernanke to reiterate the Fed's commitment to an
accommodative policy stance, while sticking to the latest policy
statement in terms of cost and benefit of further QE, that it is
prepared to increase or decrease the size of purchases as the
economy evolves," analysts at Barclays Capital wrote in a client
The euro was steady against the dollar, buying $1.2836
, hanging near a one-month low of $1.2796 reached on
The Australian dollar reclaimed 0.4 percent to $0.9771
after plumbing an 11-month trough of $0.9711 set on
Friday, at the tail-end of a nearly 6 percent slide so far this
The Aussie has lost some of its shine after an unexpected
rate cut from the central bank and as Chinese demand for natural
resources shows little sign of recovering to levels that drove
the currency above parity with the U.S. dollar.
"The Aussie is a lot easier to sell off than the Kiwi
because of its more obvious correlation with China's economy,"
said Takahashi of Barclays.
"At the moment it is the weakest of the three commodity
currencies, with the Canadian dollar in top place."
On Monday, the New Zealand dollar gained 0.6
percent to $0.8109. It has dropped 5.2 percent this month so