* Yen pressured after BOJ governor to step down early
* More dovish BOJ governor is expected
* Euro bounces off lows, shrugs off French call for FX
* Dollar/yen up 0.1 pct after hitting high near Y94
* Aussie down 0.3 pct after soft retail sales data
By Hideyuki Sano and Ian Chua
TOKYO/SYDNEY, Feb 6 The yen slumped to a
33-month low against the dollar and the euro on Wednesday as
investors piled back into the easy one-way trade on the view
that a more dovish Bank of Japan governor will soon be installed
to push through aggressive easing measures.
The euro resumed its uptrend despite a call from French
President Francois Hollande to protect the currency from
irrational movements, while the Australian dollar dropped to a
six-week low after soft Australian retail sales data.
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 term 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 a governor who will be bolder than the outgoing
BOJ chief in loosening monetary policy. Abe is expected to name
Shirakawa's successor later this month.
Despite sporadic complaints from some governments such as
Germany and South Korea, Abe's support for aggressive easing
does not seem to have irked many other countries, making yen
selling comfortable, said Minori Uchida, chief currency
strategist at the Bank of Tokyo-Mitsubishi UFJ.
"The G20 finance ministers meeting next week is unlikely to
discuss currencies much. The market is likely to test further
downside on the yen in the near future," Uchida said.
On Wednesday the dollar and the euro both surged to fresh
33-month high at 93.91 yen and 127.63
respectively, steadily moving towards their 2010 peaks around
94.99 and 134.37.
The dollar last traded at 93.77 yen, up 0.1 percent from
late U.S. levels while the euro fetched 127.40 yen, also a gain
of 0.1 percent during the day.
The single currency also held the upper hand against the
dollar. It last stood at $1.3585, flat from late U.S.
levels but up sharply from a one-week low of $1.3458 hit on
Spanish and Italian bonds rebounded on Tuesday after a steep
selloff in the previous session, easing fears that political
uncertainties in these countries could derail the euro zone's
efforts to contain its debt crisis.
Also helping to turn the euro higher was a survey on Tuesday
showing the euro zone's economy is probably recovering even
though it also showed the gulf between the two biggest members
has widened, a development that will no doubt worry
As the French economy struggles, President Hollande urged
the euro zone to set a mid-term target for its currency's
But the market shrugged it off as the idea that appeared to
have little support, with Germany opposing intervening on
currency markets and
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.
"I would like to see how the ECB will change its tone after
perhaps it became too bullish in January," said Mitsubishi
Elsewhere, the Aussie crumbled to a six-week low of $1.0345
after weak local retail sales strengthened the case of further
interest rate cuts this year. The last cut was in December.
It last traded at $1.0354,, down 0.3 percent from
late U.S. trade.
Sterling saw only partial relief ahead of the Bank of
England's own policy meeting on Thursday after having fallen to
a fresh 5-1/2 month low of $1.5630 on Tuesday.
Concerns about the economy prompted some marginal talk that
the central bank could opt for further quantitative easing to
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 says when testifying before a parliamentary
committee on Thursday.