* Dlr dips on sell-the-fact after BOJ confirmation hearings
* Opposition lawmaker says can’t support BOJ nominee Iwata
* Aussie edges higher after RBA holds rates steady
By Masayuki Kitano
SINGAPORE, March 5 (Reuters) - The dollar fell against the yen on Tuesday, pressured by a sell-the-fact reaction following the confirmation hearings of the government’s nominees for the two Bank of Japan deputy governor posts.
Kikuo Iwata, nominated by the government for one of the central bank’s two deputy governorships, said that foreign bond purchases would be a policy option only if other initiatives failed.
Hiroshi Nakaso, the government’s nominee for the BOJ’s other deputy governorship, said on Tuesday he would guide monetary policy without being bound by precedent.
The dollar fell 0.6 percent to 92.97 yen, pulling away from a high of 94.77 yen struck on Feb. 25, which was the dollar’s highest level against the yen since May 2010.
The dollar’s drop against the yen is mostly a reflection of market positioning, said Jesper Bargmann, Asia head of G11 spot FX for RBS in Singapore.
Traders were probably long dollar/yen going into Tuesday’s confirmation hearings of Iwata and Nakaso, Bargmann said.
“I think what’s happening is a little bit of buying the rumour, selling the fact,” said Bargmann.
“So when we see the headlines come out, everyone is already expecting more, even though there’s very little more they can actually say. The rhetoric has been quite aggressive. But now we need to see some action,” he added.
The dollar extended its losses against the yen after opposition Democratic Party lawmaker Keisuke Tsumura said he could not support Iwata, the government’s BOJ deputy governor nominee because the Iwata wants to revise the law governing the central bank’s independence.
The ruling Liberal Democratic Party holds a majority in the lower house of parliament, but does not have a majority in the upper house. The opposition Democrats could potentially hold the decisive votes for nominees in that chamber.
The dollar extended its losses against the yen following Tsumura’s comments, as they stirred some concern over whether Iwata, an advocate of aggressive monetary easing, would be approved by parliament.
Traders, however, said Iwata could still win parliamentary approval even if the Democratic Party of Japan (DPJ) were to oppose him, as long as other opposition parties join the ruling Liberal Democratic Party (LDP) to approve his nomination.
“Apparently...the DPJ can’t block it if the small opposition parties vote with the LDP,” said Jeffrey Halley, FX trader for Saxo Capital Markets in Singapore.
Gareth Berry, G10 FX strategist at UBS in Singapore also noted that it was unclear whether Tsumura’s view reflects the stance of the opposition DPJ as a whole.
“It’s not clear yet if that is the view of his party, but it seems like an isolated comment from a single official at this stage,” Berry said.
“Let’s see how things pan out... The key thing is Kuroda looks like he has DPJ support,” he said, referring to Haruhiko Kuroda, the government’s nominee for Bank of Japan governor to replace Masaaki Shirakawa, who steps down later in March.
Elsewhere, the Australian dollar rose 0.4 percent to $1.0244 , getting a lift after the Reserve Bank of Australia (RBA) kept interest rates unchanged at a record low of 3.0 percent as expected.
The Aussie dollar edged higher after the interest rate decision as the market had seen a slender chance of an interest rate cut by the RBA.
The euro edged up 0.1 percent to $1.3042, staying above Friday’s low of $1.2966, its lowest level in almost three months.
The euro has been weighed down by political uncertainty in Italy and weak economic indicators, which have stirred some speculation that the European Central Bank might cut interest rates sooner than previously thought.
One factor that could support the single currency in the near term is market positioning, said a trader for a Japanese brokerage house in Tokyo.
“If you look at the IMM positions...there has been a shift to a short position from what had been a significant long position,” the trader said, adding that the euro could gain some support if traders pare back their euro bearish bets.
Data released last week showed that currency speculators on the International Monetary Market (IMM) flipped to a net short position in the euro in the week ended Feb. 26 for the first time since early January. < 1099741NNET>