* Focus on BOJ Kuroda's comments later in data for near-term
* Aussie on defensive after being hit by host of negatives
By Shinichi Saoshiro
TOKYO, May 21 Lower U.S. Treasury yields held
the dollar near a 3-1/2 month low against the yen early on
Wednesday, with markets looking for potential catalysts from the
Bank of Japan's policy review later in the day.
The dollar dipped 0.1 percent to 101.25 yen, within
striking distance of 101.10 hit on Monday, its lowest since Feb.
5. The dollar has shed roughly 1 percent against the yen so far
this month, nudged lower by a steady decline in U.S. yields.
U.S. Treasuries prices rose on Tuesday after New York
Federal Reserve President William Dudley said the central bank
will likely be slow in raising interest rates.
The immediate focus in Asia was on the Bank of Japan's
monetary policy decision and Governor Haruhiko Kuroda's news
Participants say the markets have mostly factored in the BOJ
holding steady on policy and was largely looking to the
governor's post-meeting comments.
While few expect Kuroda to diverge from his generally
optimistic stance on the economy, traders will be watching for
any signs of further bullishness that may add to the weight of
views suggesting no fresh monetary easing is on the cards over
the near term.
However, any hint the central bank may be ready to ease in
the next few months could hit the yen.
"The BOJ is widely seen keeping its economic assessment
unchanged and under such expectations naturally interest falls
on the governor's view on the economy. The yen would be sold if
he raises expectations for near-term easing," said Shinichiro
Kadota, chief Japan FX strategist at Barclays in Tokyo.
The Australian dollar extended losses against its U.S.
counterpart and plumbed a fresh two-week low, hurt by a host of
The Aussie slipped 0.1 percent to $0.9231 after
brushing $0.9228, its lowest since May 2.
The antipodean currency was knocked by a slide in prices of
iron ore, Australia's biggest export earner and media reports
that suggested the country's top notch AAA credit rating was at
A local newspaper reported that rating agency Standards and
Poor's could review Australia's AAA rating should the government
fail to realise large cuts to the budget in coming years. link.reuters.com/xar49v
The story was later disputed by a S&P spokesman.
The euro stood little changed at $1.3703. The fall in
U.S. yields helped the single currency pull back from a 2-1/2
month low of $1.3648 hit last week on expectations the European
Central Bank will ease monetary policy in June.
The euro could still face some pressure ahead of potentially
destabilising European Parliament elections later this week,
where votes for anti-austerity, eurosceptic parties look set to
(Editing by Shri Navaratnam)