* Yen pressured, hits new lows across the board
* BOJ governor to step down early, more dovish governor
* Euro bounces off lows, up sharply vs JPY
By Ian Chua
SYDNEY, Feb 6 The yen resumed its decline on
Wednesday as investors piled back into the easy one-way trade as
the market bet that a more dovish Bank of Japan governor will
soon be installed to push through aggressive easing measures.
The Japanese currency came under renewed pressure after BOJ
governor Masaaki Shirakawa on Tuesday announced he will step
down on March 19, three weeks before his five-year tenor ends in
Prime Minister Shinzo Abe, who has put the BOJ under intense
pressure to do more to spur the economy, has made it abundantly
clear he wants someone in the job who will be bolder than the
outgoing BOJ chief in loosening monetary policy.
The dollar and euro both surged to fresh 2-1/2 year highs at
93.79 yen and 127.43 respectively, steadily
moving towards their 2010 peaks around 94.99 and 134.37.
The Australian dollar, and even a subdued sterling, also
pounced on the yen, with the Aussie reaching a 4-1/2 year peak
around 97.42 yen. The pound touched a 3-year high
near 147.25 yen.
"The Bank of Japan is about to get a lot more dovish, and
sooner than previously thought," said Christopher Vecchio, a
currency analyst at DailyFX.
Vecchio said the BOJ could accelerate the timeline for
open-ended asset purchases, increase the size of the asset
purchases or extend the maturity of bonds under its current
asset purchase programme, measures yet to be fully priced into
The near 2-percent rally in euro/yen helped the single
currency strengthen against the dollar as well. It rose to
$1.3585, bouncing off a one-week low of $1.3458.
Euro bulls had turned cautious earlier in the week, worried
that the European Central Bank might do or say something to
weaken the single currency at Thursday's policy meeting.
While the ECB has been relatively upbeat about the outlook
for the euro zone, a strengthening euro is unwelcome in a region
still largely mired in recession.
A survey on Tuesday showed the euro zone's economy is
probably recovering but the gulf between its two biggest members
has widened, a development that will no doubt worry
Sterling saw only partial relief ahead of the Bank of
England's own policy meeting on Thursday. It fell to a fresh
5-1/2 month low around $1.5630 as concerns about the
economy prompted some marginal talk that the central bank could
opt for further quantitative easing to stimulate growth.
The consensus forecast, however, is for the BOE to stand
pat. The market is also keenly waiting to hear what incoming BOE
Governor Mark Carney has to say when he testifies before a
parliamentary committee on Thursday.
Any dovish slant could see the pound come under further
pressure, mirroring the Australian dollar which eased after the
Reserve Bank of Australia on Tuesday kept a clear easing bias
even as it left rates steady.
The Aussie was last at $1.0386, having fallen as
far as $1.0370. A break of $1.0361 will take it back to lows not
seen since late December.
Traders said the market could target the downside if
Australian retail sales data due at 0030 GMT surprised on the