Dollar, euro surge against yen in Asian trading

The dollar and euro rallied against the yen in Asia on Tuesday as Japanese central bank policymakers prepared to meet, under pressure to launch more economic stimulus as the economy falters.

In afternoon Tokyo trade the dollar jumped to 104.82 yen, its highest level since January, and up from 104.27 yen in Europe. The euro surged to 137.55 yen against 136.94 yen.

US markets were closed Monday for the Labor Day holiday.

The greenback also added to recent gains against the euro as the European Central bank heads into a policy meeting this week. The single currency was at $1.3122 in Tokyo, down from $1.3133 in Europe.

Japan and the eurozone have both recorded poor economic data recently, boosting expectations of further monetary easing which would tend to weaken their respective currencies.

At the same time the US Federal Reserve is being urged in some quarters to raise interest rates -- which would lift the dollar -- as the economy shows regular signs of getting back on track.

Eyes are on the release Friday of US jobs data expected to show further improvement.

Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, said in a note that recent weakness in the yen suggests dealers "have quietly started factoring in the BoJ's additional monetary easing".

Japan's central bank kicks off a two-day meeting on Wednesday.

Yosuke Hosokawa, head of Sumitomo Mitsui Trust Bank's forex sales team, acknowledged that speculation over BoJ easing was a factor in the dollar-yen rate's moves, although he added that it was "not the main factor behind today's trade".

"Selling pressure on the euro ahead of the ECB meeting pushed up the dollar, which maintained its strength against other currencies, including the yen," Hosokawa said.

"Plus, it's hard for players to sell the dollar ahead of the payroll figures this week, which is also sustaining the dollar's strength."

- 'Speculative dollar buying' -

Dealers were also tracking media reports that Japanese Prime Minister Shinzo Abe's expected cabinet shuffle Wednesday would see Yasuhisa Shiozaki put in charge of the health, labour and welfare ministry, which oversees Japan's massive public pension fund.

Shiozaki is reportedly in favour of shifting more of the bond-heavy fund's assets into stocks.

"Some large domestic institutions are said to be buying dollars, selling yen, and buying Nikkei futures on these reports," an equity-trading director at a European brokerage told Dow Jones Newswires.

"The buying may be speculative, but the implications of the Abe move, if true, will be a further 'politicisation' of the financial market, which is fundamentally bullish for stocks and bearish for the yen."

The dollar was higher against other Asia-Pacific currencies.

It strengthened to Sg$1.2524 from Sg$1.2496 on Monday, to 32.06 Thai baht from 31.97 baht, to 11,726.30 Indonesian rupiah from 11,697.00 rupiah, to 1,017.71 South Korean won from 1,013.90 won, and to 43.62 Philippine pesos from 43.58 pesos.

The US unit also firmed to Tw$29.92 from Tw$29.86 and to 60.60 Indian rupees from 60.49 rupees.

The Australian dollar weakened to 92.95 US cents from 93.40 cents as the country's central bank kept interest rates on hold at a record low 2.5 percent, while the Chinese yuan rose to 17.02 yen from 16.95 yen.