* Japan delays naming next BOJ governor, friction seen
* Markets have heard the talk, now want to see BOJ action
* Sterling wallows at 7-mth low vs USD; Aussie perkier
By Ian Chua
SYDNEY, Feb 20 The yen held its ground against
the dollar on Wednesday as doubts surfaced on whether the Bank
of Japan will put into action bold plans to jumpstart the
economy, while sterling languished at a seven-month low.
A delay in nominating a Bank of Japan governor has fanned
talk of friction between Japan's prime minister and finance
minister over who should run a central bank charged with taking
aggressive action to beat deflation.
Japan's trade data due at 2350 GMT is shaping up to be the
next focal point with a weak outcome likely to bolster efforts
to reflate the economy.
The dollar, which has gained around 8 percent on the yen
this year, stood at 93.55 having retreated from Monday's
high of 94.22. But it still remained near a 33-month peak near
94.47 set on Feb. 11.
The euro bought 125.20 yen after recovering from
a dip to 124.56, in part thanks to a closely watched ZEW survey
showing a jump in German investor and analyst sentiment to
That upbeat data also helped lift the euro against its U.S.
counterpart, pushing the common currency to a near one-week high
of $1.3396. It was last at $1.3385.
The ZEW report is a positive sign ahead of the more
important euro zone flash PMIs on Thursday and Germany's IFO
business sentiment on Friday, said Vassili Serebriakov, a
strategist at BNP Paribas.
"We therefore continue to view any pullbacks in EUR/USD as
corrective, with support coming from the November bullish daily
trendline currently at 1.3280. We expect EUR/USD to rally to
1.3800 by the end of Q1," he said.
Against sterling, the euro touched a two-week high at 86.85
pence. Investors gave the pound a wide berth partly
on growing speculation the UK could soon lose its prized
triple-A credit rating.
The market was also waiting for minutes of the Bank of
England's latest policy meeting, looking for signs on whether
policymakers will continue to tolerate above-target inflation
and a weaker pound.
Sterling traded at $1.5424, having plumbed a
seven-month low at $1.5414 in New York.
Commodity currencies like the Australian and New Zealand
currencies fared much better, with the Aussie dollar popping
back above $1.0300. Still, it remained contained a slim
$1.0200/0400 range seen for most of this month.
Christopher Vecchio, currency analyst at DailyFX said a fall
below $1.0260/70 would be needed to confirm a breakdown. "With
the downtrend swing highs coming in at $1.0460/80, our bias
remains bearish against this zone. A break above implies a
rebound back towards the highs above 1.0600."
Partly supporting the Aussie, minutes of the Reserve Bank of
Australia Feb. 5 policy meeting out on Tuesday suggested the
central bank was in a wait-and-see-mode, rather than seeking to
actively cut interest rates.