Yen on defensive as new Bank of Japan governor awaited
SYDNEY (Reuters) - The yen was broadly softer in Asia on Thursday as markets waited for clues to see how quickly the new Bank of Japan will deliver aggressive easing policies when he gives his first media conference later in the day.
The dollar bought 96.09 yen, within striking distance of a 3-1/2 year high of 96.71 reached last week, while the euro fetched 124.26 yen, not too far from a 34-month peak of 127.71 set early in February.
Reports said the new BOJ governor, Haruhiko Kuroda, will announce a policy shift aimed at quickly reaching the 2 percent inflation target through radical reform. Among the proposals will be buying longer term JGBs and an early start to open-ended asset buying.
That would bring Japan more in line with the United States, where the Federal Reserve has been buying assets for years.
Chairman Ben Bernanke on Wednesday said the U.S. central bank would only slow the pace of its bond buying after the labour market showed sustained improvement.
"There will be reasonable U.S. economic growth this year and the unemployment rate will drift lower. But neither will be sufficient to induce the Fed to take its foot off the gas. The open-ended QE program is set to run into early 2014 at the very least," said Martin McMahon, economist at Commonwealth Bank.
The dollar index was little changed at 82.878, but off a seven-month high of 82.606 set recently. Traders expect the index's downside will be limited while worries about Cyprus persist.
The tiny European state is still scrambling to secure a deal to avert a financial meltdown, having rejected terms of a bailout from the European Union. It extended a bank lockdown to next week to prevent a run on banks and has turned to Russia for a lifeline.
Despite this, the euro managed to drift up to $1.2933 from a four-month trough around $1.2843 set on Tuesday as investors clung to hopes that a last minute deal will be struck.
One stand out performer in Asia was the New Zealand dollar, which jumped on the back of data showing the country grew at its fastest clip in three years in the December quarter.
The kiwi surged about 40 pips on the data to hit a high of $0.8283. It was last at $0.8255.
Traders are now looking to a report on China's manufacturing sector for fresh cues. In February, the survey by HSBC showed factory activity in Asia's biggest economy grew at its slowest pace in four months.
(Editing by Wayne Cole)
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