(Adds dropped word in 8th para)
* FX market subdued before Thursday's ECB meeting
* Weak Australian Q3 GDP data hits Aussie
* Bank of Canada meeting eyed
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, Dec 7 The dollar edged back up towards a
10-month high against the yen on Wednesday, while most major
currencies appeared to be looking ahead to Thursday's European
Central Bank policy meeting.
The ECB is widely expected to announce an extension to its
quantitative easing programme, but there is uncertainty over
whether the size of the monthly asset purchases will be kept
steady or scaled back, and over whether a formal signal on the
eventual end of the asset-purchase programme will be sent.
If the ECB does say it will start to scale back its asset
purchases - so-called tapering - the euro would be likely to
rebound following a 4 percent fall against the dollar
over the past month, analysts said.
On Wednesday it edged up 0.1 percent to $1.0724. The
European currency had slumped on Monday to $1.0505, its lowest
since March 2015, in a knee-jerk reaction after Italian Prime
Minister Matteo Renzi lost a referendum on constitutional reform
and said he would resign.
But it quickly jumped back to a 3-week high of $1.0797 on
the same day as a worst-case political scenario for Rome
appeared to have been averted for the time being, and as
investors turned their attention to the ECB.
"People had gone into the referendum with a very pessimistic
view and I think the last five years have taught us that, as far
as the euro is concerned, political issues often don't have a
lasting impact," said DZ Bank currency analyst Sonja Marten in
The dollar rose 0.2 percent to 114.20 yen, not far
from the peak of 114.83 hit last week, its highest against the
Japanese currency since early February. The greenback has surged
over 10 percent against the yen in the past month.
Bank of Japan Deputy Governor Kikuo Iwata said on Wednesday
that the central bank had not shifted its focus away from the
pace of money printing and stressed it remained committed to
using both rate cuts and asset purchases as key tools to revive
"The Fed is hiking rates, the ECB might extend the duration
of its programme... but the next big thing is going to be
tapering," said Marten. "There's a general move away from adding
onto expansionary measures. So the central banks that continue
to signal that they are willing to do that stand out."
Against a basket of currencies, the dollar was flat at
100.50, having poked above 102.00 to a 13-1/2-year in
late November as U.S. Treasury yields soared on prospects of
president-elect Donald Trump adopting large fiscal spending and
"There are not many factors for the market to trade on ahead
of Thursday's ECB meeting, which remains the week's focal
point," said Junichi Ishikawa, senior FX strategist at IG
Securities in Tokyo. "It could spell the beginning of the end of
the Trump rally."
The biggest mover among major currencies was the Australian
dollar, which fell as much as 0.6 percent after
weaker-than-expected GDP data.
The Canadian dollar was flat ahead of a Bank of Canada
policy meeting that is expected to see interest rates left
For Reuters new Live Markets blog on European and UK stock
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(Additional reporting by Shinichi Saoshiro in Tokyo; Editing by