By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar rose against the yen in Asian trading Monday on expectations that the Bank of Japan will unveil more easing measures at the conclusion of its two-day policy meeting Tuesday.
Against the Japanese yen, the dollar (USDYEN 83.3200, +0.0800, +0.0961%) rose to ¥83.59 from ¥83.31 in late North American trading Friday.
The dollar index (DXY 78.14, +0.05, +0.06%) , a measure of the greenback against a basket of six major currencies, rose to 78.201 from 78.070 late Friday.
While the Bank of Japan is “widely expected to leave its policy rate unchanged at 0.1%, it may announce further easing measures against the background of persistent [yen] strength,” Mitul Kotecha, global currency strategist at Credit Agricole CIB, said in a note to clients Monday.
While the risk that Japanese authorities will intervene in currency markets again may prevent the dollar from slipping further against the yen, “the market is increasingly testing the resolve of the Japanese authorities,” he said.
Strong dollar support is apparent around the ¥82.80 level, “with the authorities unlikely to allow a break below this technical level in the short term,” Kotecha said.
Against its European rival, the greenback took a breather from its recent depreciation.
The euro (EURUSD 1.3772, -0.0021, -0.1523%) fell to $1.3761 from $1.3784 late Friday, and the British pound (GBPUSD 1.5793, -0.0011, -0.0696%) fell to $1.5808 from $1.5837.
The single currency got some support from weekend comments from Chinese Premier Wen Jiabao
“We hope that by intensifying cooperation with you, we can be of some help in your endeavor to tide over difficulties at an early date,” Wen said Sunday in a speech to the Greek parliament, according to The Wall Street Journal. “China will not reduce its euro-bond holdings and China supports a stable euro.”
The euro marked a gain of 7.4% against the dollar in September, its biggest monthly rise since December 2008.
On Friday, the dollar fell after a report showing weakness in the U.S. manufacturing sector supported investors, who expect the Federal Reserve to resume large-scale bond purchases in coming months to boost the U.S. economy. See Friday's Currencies report.
