* Abe voted in as prime minister, to select allies for his
* BOJ minutes show some called for action if econ worsens
* Euro flirts with 16-month high vs yen
* Aussie retraces Monday's one-month low vs greenback
By Lisa Twaronite
TOKYO, Dec 26 The yen sank to a 20-month low in
Asian trading on Wednesday, as Shinzo Abe assumed Japan's helm
with a mandate to weaken its currency and push for more drastic
monetary and fiscal stimulus.
Overall activity was thin, after most global financial
centres were closed for the Christmas holiday. All G10 markets
except Japan were closed on Tuesday, and only Japanese and U.S.
markets were to open on Wednesday. Hong Kong and Australia also
remained closed on Wednesday.
The dollar rose as high as 85.38 yen on the EBS
trading platform, its highest since April 2011, breaking through
resistance at its 200-week moving average around 84.95 yen. It
last stood at 85.32 yen, up about 0.7 percent, with its next
resistance seen at the yen's April 2011 nadir of 85.53 yen.
Options-related positions were said to lie around 85.50 yen.
Abe, whose party won a landslide victory in a Dec. 16
election, was elected prime minister by parliament's lower house
on Wednesday. He is expected to pick a slate of close allies to
serve in his government.
On Tuesday, Abe reiterated that he seeks to tame the strong
yen to help revive Japan's economy.
"There is no reason to expect the trend to change anytime
soon, with no incentive to buy the yen now," said Kimihiko
Tomita, head of foreign exchange for State Street Global Markets
"Of course, on an intraday basis, there could be spells of
profit-taking, but overall, there is no compelling reason that
would make it necessary to buy the yen," he said.
Abe has also called for aggressive monetary easing by the
Bank of Japan combined with massive fiscal spending.
Even before the heightened pressure, minutes of the BOJ's
November policy meeting released on Wednesday revealed that some
board members considered policy options if the outlook for the
economy and prices were to worsen.
One board member even suggested that the BOJ commit to
buying assets in an open-ended manner, without setting a strict
deadline, until it achieved its 1 percent consumer inflation
Ongoing concerns about the U.S. budget impasse continued to
underpin the U.S currency.
President Barack Obama may return to Washington from his
Hawaiian holiday as early as Wednesday evening to address the
unfinished negotiations with Congress, according to an
The next session of the U.S. Senate was set for Thursday,
but the issues presented by "fiscal cliff" of tax hikes and
spending cuts scheduled to take effect next year were not on the
calendar. The U.S. House of Representatives has nothing on its
schedule this week, but its members have been told they could be
called back on 48 hours notice, making their Thursday return a
The dollar index stood at 79.715, after it
rose as high as 79.780 on Tuesday, its loftiest level since Dec.
The euro traded at $1.3179, nearly unchanged from the
previous session and below its 7 1/2-month high of $1.33085 hit
one week ago.
Against the yen, the euro rose as high as 112.55
yen, approaching its 16-month high of 112.59 yen hit on Dec. 19.
It last stood at 112.44 yen.
Technical analysts cited little resistance above last week's
high, with the euro's 200-week moving average still far away,
around 115.00 yen. The European unit has not closed above that
average since late Sept. 2008.
With markets in Australia still closed for the holiday, the
Australian dollar did not stray far from recent ranges.
It last stood at $1.0362 after falling as low as $1.0357
earlier, matching a one-month low struck on Monday. It traded
below the base of its daily Ichimoku cloud at $1.0366, and
investors will be watching to see if it closes below that level.
Further support for the Aussie was said to lie around its
200-day moving average at $1.0295 and then at its Nov. 16 low of