* Yen dips as Japan’s ruling coalition wins majority
* Jury still out on whether Abe will push tough reforms
* A$ aided by China rate liberalisation, PMI next hurdle
By Wayne Cole
SYDNEY, July 22 (Reuters) - The yen inched lower in Asia on Monday after a big win at the polls by Japanese Prime Minister Shinzo Abe gave a green light for prolonged monetary stimulus, while fuelling hopes for reforms that could reflate the world’s third-largest economy.
The dollar edged up to 100.40 yen, against 100.31 late in New York last week but faced resistance around Friday’s peak of 100.86 yen. It was briefly quoted at 101.05 on EBS. The next major target was the July 8 high of 101.53 yen. The euro reached its highest in two months at 132.14 yen.
Against the dollar, the single currency was steady at $1.3144, while the dollar index was down a whisker at 82.580.
Public broadcaster NHK said early on Monday that Abe’s Liberal Democratic Party (LDP) and its partner, the New Komeito party, had won at least 74 seats, giving it a stable majority in the upper house.
“With the election now behind us, stability is expected in the Japanese political scene, facilitating Prime Minister Abe’s efforts to push through structural reform, tax reform and deregulation,” said Tohru Sasaki, an analyst at JPMorgan.
“While we believe today’s result should be positive for the Nikkei index and USD/JPY, we don’t expect significant and immediate market impact,” he added.
That was partly because the win had been priced in and partly because the Japanese parliament would likely not start debating any new policies until some time in October.
Still, the victory would also strengthen the hand of Bank of Japan Governor Haruhiko Kuroda in his efforts to push massive monetary stimulus and end deflation.
Kuroda, who was in Moscow over the weekend attending the Group of 20 meeting, said quantitative easing was still in its early stages but there were signs it was working.
The G20 meeting ended with a pledge to put growth before austerity, seeking to revive a global economy that “remains too weak” and adjusting stimulus policies with care so that recovery is not derailed by volatile financial markets.
The Australian dollar was supported at $0.9191 after China’s central bank removed controls on bank lending rates, a long-awaited move that signals the new leadership’s determination to carry out market-oriented reforms.
China is Australia’s single biggest export market and any step to make its economy more efficient is seen as potentially positive for trade.
Dealers are awaiting the HSBC flash PMI due on Wednesday for an update on the state of Chinese manufacturing.
Australia also reports inflation figures for the second quarter on Wednesday and a low reading could add to the case for a further cut in interest rates when the Reserve Bank of Australia (RBA) next meets on August 6.