* BOJ stands pat on policy as expected, little market
* BOJ Kuroda comments at 0630 GMT eyed for near-term
* Aussie on defensive after being hit by host of negatives
* Econ outlook, fiscal austerity to underpin Aussie -
(Updates prices, quotes)
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 governor later in the day.
The dollar stood little changed at 101.33 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 received their latest boost on Tuesday after
New York Federal Reserve President William Dudley said the
central bank would likely be slow in raising interest rates.
Market reaction was muted to the BOJ's widely-anticipated
decision on Wednesday to stand pat on monetary policy with much
of the focus on Governor Haruhiko Kuroda's news conference at
Few expect Kuroda to diverge from his generally optimistic
stance on the economy and 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
But indicators, most recently trade data that showed export
growth remained tepid, have not exactly painted a bright
economic picture for Japan.
Any comments that could be taken as hints 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 market is also keeping an eye on the Federal Reserve's
April policy meeting minutes due later in the day. While the Fed
is not expected to raise interest rates until at least the
middle of next year, investors will be keen to learn whether
officials discussed the myriad issues they will need to confront
when the time comes.
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 $0.9236 after
brushing $0.9216, 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 an S&P spokesman.
"The Australian dollar may struggle for a while after the
recent plunge, but in the longer term it is likely to remain
steady," said Sho Aoyama, senior market analyst at Mizuho
Securities in Tokyo.
The Aussie has gained about 3.6 percent against the dollar
so far this year.
"For one thing the Australian economic outlook has been
steadily improving and it can also count on support from
interest rates that are higher relative to those in other
developed economies. As for the credit rating talk, the impact
could be short term as Australia has made considerable fiscal
austerity efforts," Aoyama said.
The euro stood little changed at $1.3701. 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 and Jacqueline Wong)