* U.S. markets up slightly, awaiting Congress
* Yen at 20-month low vs dollar, boosts Nikkei to 9-month
* European markets closed
* MSCI Asia ex-Japan little changed on low trading volume
By Chikako Mogi and David Gaffen
NEW YORK/TOKYO, Dec 26 The yen fell to a
20-month low against the dollar on Wednesday after Japan swore
in a new prime minister who has promised aggressive stimulus
measures to rein in deflation, while U.S. stocks and oil rose in
The dollar rose to a 20-month high of 85.48 yen on
trading platform EBS following the swearing-in of Shinzo Abe as
premier. Traders eyed the dollar's 2011 high of 85.53 yen as the
Abe is calling for a mix of aggressive monetary policy
easing and big fiscal spending to beat deflation and weaken the
yen. He is pressuring the Bank of Japan to adopt a 2 percent
inflation target that would auger for a weaker currency,
threatening changes at the central bank if his wishes are not
The euro rose as high as 112.92 yen on EBS, a
16-month high, and was last at 112.68 yen, up 0.8 percent. The
euro was at $1.3244 against the dollar, up 0.5 percent.
"The election of Abe has had a galvanizing effect on the
dollar/yen exchange rate and he has been able to accomplish more
in two months of jawboning than the BoJ has... over the past
several years," said Boris Schlossberg, managing director of FX
strategy at BK Asset Management in New York.
U.S. shares were slightly higher in post-Christmas trading
with Congress likely to resume negotiations to avoid the "fiscal
cliff," a series of $600 billion in spending cuts and tax hikes
that would slow the U.S. economy sharply unless lawmakers take
A U.S. official said on Tuesday that President Barack Obama
may return to Washington from his Hawaiian holiday as early as
Wednesday evening to resume talks.
The odds are increasing that Congress will not come to an
agreement before the end of the year, however, leaving a series
of big decisions to early 2013, when tax rates are scheduled to
rise for most Americans. Economists warn that the world's
largest economy could fall into recession.
There is some concern that the impending tax hikes cut into
holiday spending in the United States. Holiday-related sales
were up 0.7 percent from Oct. 28 through Dec. 24, compared with
a 2 percent increase in 2011, according to MasterCard Advisors
Many markets remain closed following Christmas. European
exchanges were largely shuttered, and Hong Kong and Australia
were also closed.
The Dow Jones industrial average was up 10.09 points,
or 0.08 percent, at 13,149.17. The Standard & Poor's 500 Index
was down 0.95 points, or 0.07 percent, at 1,425.71. The
Nasdaq Composite Index was down 3.05 points, or 0.10
percent, at 3,009.55.
U.S. single-family home prices rose in October for the ninth
month in a row. The S&P/Case Shiller composite index of 20
metropolitan areas gained 0.7 percent in October on a seasonally
adjusted basis, stronger than the 0.5 percent rise forecast by
economists polled by Reuters.
Ten-year U.S. Treasury notes rose 4/32 of a point in price
to yield roughly 1.7598 percent. The U.S. bond
market was closed on Tuesday for Christmas.
Brent crude climbed above $110 per barrel on
Wednesday, hitting a two-month high, with investors hoping for a
last-minute deal to avoid a U.S. fiscal crisis. U.S. crude
futures gained $2.39, or 2.8 percent, to $91.
The weaker yen has bolstered hopes for better earnings from
Japanese companies and underpinned the Nikkei, which has gained
some 18 percent since mid-November, when the election was
scheduled. The yen has lost nearly 8 percent against the dollar
in the same period.
The Nikkei closed at a nine-month high with a 1.5
percent gain on Wednesday.
Minutes of the BOJ's policy-setting meeting in November,
released on Wednesday, showed that some board members said the
central bank must act decisively, without ruling out any policy
options, if the outlook for the economy and prices worsens
MSCI's broadest index of Asia-Pacific shares outside Japan
was little changed. Shanghai shares were
flat, but stayed in positive territory on the year after a 2.5
percent jump on Tuesday erased 2012 losses. It is set for a
first annual gain in three years.