* Euro holds ground on hopes of 'fiscal cliff' progress
* BOJ seen likely to take further easing steps this week
By Lisa Twaronite
TOKYO, Dec 18 The yen steadied in early Asian
trade on Tuesday after skidding to its lowest level against the
U.S. dollar in over a year and a half in the previous session,
while the euro held its ground on hope of progress in the U.S.
"fiscal cliff" impasse.
The yen plunged after Japan's conservative Liberal
Democratic Party won a landslide victory in the election at the
weekend, ahead of this week's Bank of Japan meeting at which
many expect the central bank to take further easing steps.
The euro was seen as benefiting from an improvement in risk
appetite on hopes of a progress on the U.S. budget stalemate.
U.S. President Barack Obama and top Republican John Boehner met
at the White House on Monday to discuss how to avert tax hikes
and spending cuts that economists fear could push the economy
The euro mostly shrugged off comments on Monday from
European Central Bank President Mario Draghi, who reiterated
concerns over slow growth of Europe's economy.
"It seems that policymakers are still worried about the
eurozone's economic outlook but euro/dollar continues to hold
steady thanks to the rally in equities and the Federal Reserve's
balance sheet expansion," said BK Asset Management managing
director Kathy Lien in a research note.
At its policy meeting last week, the U.S. Federal Reserve
announced a new round of monetary stimulus steps.
"No major euro zone economic reports are due for release on
Tuesday, leaving the euro/dollar vulnerable to risk appetite,"
The dollar was nearly unchanged from late North American
levels at 83.86 yen, after rising as high as 84.48 yen in
the previous session, its highest since April 2011.
The euro stood at $1.3160, also steady from its late
levels, after it touched a 8-1/2-month high of $1.3191 in the
Against the yen, the euro was nearly unchanged at
110.38 yen, after rising as high as 111.30 yen in the session
following Sunday's Japan election which set the stage for the
return to power of former Prime Minister Shinzo Abe.
Abe's LDP and its ally the New Komeito party secured the two
thirds majority needed to overrule parliament's upper house,
meaning Japan's next government will have a greater chance of
pushing though its policies.
"The corrective fall in the dollar/yen after the election
was small and it's crawling up because the yen weakening trend
is still intact. But after the BOJ meeting, there will likely be
pre-holiday profit-taking, pushing the dollar/yen down by 1-2
yen," said Yuji Saito, director of the foreign-exchange
department in Tokyo at Credit Agricole Corporate & Investment
The Bank of Japan is scheduled to meet on Wednesday and
Thursday, and many analysts expect the central bank to come up
with additional easing steps. Sources have said the BOJ could
increase its asset-buying and lending programme by another 5-10