* BOJ boosts asset buying by 10 trln yen
* It will review policy goal as wanted by new leader
* Tension over U.S. fiscal cliff helps yen, hurts euro
By Hideyuki Sano
TOKYO, Dec 20 The yen kept slim gains on
Thursday after the Bank of Japan eased monetary policy as
expected, increasing its asset purchases by 10 trillion yen and
saying it would review its policy goal in a likely move towards
adopting an inflation target.
After choppy moves, the dollar steadied at around 84.14 yen
, almost the same level as before the BOJ's decision and
down about 0.3 percent from late U.S. levels.
"Some people are selling the dollar/yen after the big event
is over ahead of Christmas holidays," said Yunosuke Ikeda,
senior FX strategist at Nomura Securities.
The dollar has gained about 6 percent against the yen in the
past month or so, on speculation that Japan's new government
will push the BOJ to take more aggressive easing steps.
In a move seen as an attempt to placate incoming prime
minister Shinzo Abe, who has called for unlimited easing to
achieve 2 percent inflation, the BOJ also said it would review
its stance on price stability. At present, the BOJ has a goal
of 1 percent inflation.
Still, all that had already been priced in when the dollar
hit a 20-month high of 84.62 yen on Wednesday, market players
The euro stood at 111.32 yen, down about 0.3
percent from late U.S. levels and off a 16-month high of 112.59
yen hit on Wednesday.
The euro was little changed on the dollar at $1.3222,
having slipped from an 8-month high of $1.33085 reached on
Wednesday after German business confidence data beat market
In addition, a fall in southern European countries' bond
yields also added to support for the euro earlier.
But it later gave up gains against the dollar while the yen
also rebounded from multi-month lows as talks to resolve the
U.S. fiscal impasse appeared to have taken a turn for the worse.
The Republicans announced plans to put an alternative tax
plan to a vote in the House this week, prompting President
Barack Obama to threaten to veto it should Congress approve,
threatening to unravel progress made over the last week.
"Democrats and Republicans continued to try to frighten each
other into gaining the upper hand. They mostly managed to bring
in a mild wave of profit-taking in the markets," said Sebastien
Galy, strategist at Societe Generale.
The Australian dollar took a hit as well, slipping to
one-week lows of $1.0464 to be more than a full cent
below last week's three-month peak.
Also under pressure, the New Zealand currency slid to a near
two-week low around $0.8330 after data showed the
economy slowed more than expected in the third quarter.
Gross domestic product expanded a mere 0.2 percent in the
quarter, half of market expectations. There was a downward
revision of second-quarter growth to 0.3 percent.
"It means there's more chance of a rate cut than a hike in
2013, but our base case remains steady policy for a long time to
come," said Michael Turner, strategist, RBC Capital Markets.