* Euro briefly slips to two-week lows at $1.3325
* Yen's downtrend still intact, BOJ in focus this week
* Trading subdued with most of Asia shut for holidays
By Ian Chua
SYDNEY, Feb 11 The euro dipped to a two-week low
for a fleeting moment on Monday, while the yen clung on to
recent hard-fought gains in a session that saw little conviction
with most of Asia shut for the Lunar New Year holidays.
Japan, China, Hong Kong, Singapore, South Korea and Taiwan
are among the major centres in the region closed on Monday.
Japanese and South Korean markets reopen on Tuesday.
"It's slow and likely to stay that way until at least the
middle of the week when we get U.S. retail sales, GDP from Japan
and Europe and a BOJ meeting. So best to take a break and put
your feet up for now," a trader in Sydney quipped.
The euro briefly plumbed $1.3325 in very early
dealings after stop-loss selling was triggered below $1.3340,
traders said. It then quickly recovered to around $1.3370,
little changed from the New York close, where it idled for most
of the session.
Since hitting a 15-month high of $1.3711 on Feb. 1, the
single currency has shed about 2.5 percent. Last week, euro
bulls took a bit more profit after ECB President Mario Draghi
kept alive expectations of rate cuts. Draghi said the ECB would
monitor the economic impact of a strengthening currency.
There are also growing worries about Spain as a scandal on
secret cash payments engulfed the prime minister, while
confidence in Italy has been shaken in the run-up to the Feb.
A strong campaign by former Prime Minister Silvio Berlusconi
has opened up the race and threatened the prospects of a stable
government emerging after the vote.
"Better financial conditions are likely to be offset by
rising political risks, market positioning and a weaker economy.
We expect the euro to be on a declining trend beginning in Q2,"
said Aroop Chatterjee, analyst at Barclays Capital.
Against the yen, the euro was steady at 123.93,
holding near Friday's one-week trough around 123.43. The dollar
was at 92.63 yen, having plumbed a near one-week low of
The yen found some support after Japanese Finance Minister
Taro Aso said last Friday the currency has weakened more than
intended following its recent eye-watering slide.
In the past few months, trading in the currency had been an
easy one-way bet as Prime Minister Shinzo Abe put intense
pressure on the central bank to take bold action to revive the
But this week is shaping up to be trickier as several event
risks loom, not least the Bank of Japan's policy meeting on
The BOJ is expected to keep monetary policy steady ahead of
the G20 meeting starting Friday, particularly given that
Japanese authorities have come under international criticism for
allowing the yen to weaken.
There are also signs that Abe's push for a governor who will
lead a radical policy shake up at the BOJ is meeting resistance
from his own cabinet and financial bureaucrats.
"The yen remains our preferred funding currency, but we
might see USD/JPY coming under pressure ahead of the G20 finance
ministers meeting," analysts at Macquarie Bank wrote in a client
"This meeting will be an important test of policymakers'
ability to refrain from exacerbating the currency wars currently
being waged. An outside risk to this meeting is that the G20
unites to criticise Japan, which would lead to a stronger yen."
Following some action of its own last week, the Australian
dollar found a tentative footing near $1.0300, with
demand emerging whenever it falls below that level.
It skidded to a three-month around $1.0256 last week after
the Reserve Bank of Australia left the door open to more rate