Yen steadies in Asia

The yen steadied on Friday after plunging to a six-and-a-half month low against the dollar in the previous session on expectations a new Japanese government could push the Bank of Japan to adopt interest rates of zero or below. Strategists remained divided over whether the Japanese currency has entered a new weaker phase against its major counterparts, or whether its dramatic drop this week will prove to be an aberration.
The dollar has rallied more than two percent against the yen over the past two sessions after Japanese Prime Minister Yoshihiko Noda said he was ready to dissolve parliament's lower house on Friday for an election on December 16. "The substantial weakening of the yen in the past 48 hours has a lot of people rethinking their game plan," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
Shinzo Abe, leader of the main opposition Liberal Democratic Party and likely to be Japan's next leader, called on Thursday for the country's central bank to adopt interest rates of zero or below zero to spur lending. The dollar last traded at 81.05 yen, down about 0.1 percent from late US trading, with traders citing a large options barrier at 81.50 yen and stop-loss orders placed above it.
The dollar rose to as high as 81.46 yen on Thursday on trading platform EBS, its highest level since late April, and just shy of the 61.8 percent Fibonacci retracement from its March high of 84.18 yen to its September trough of 77.13 yen, which is at 81.49 yen. On the downside, stops are seen at the former resistance area at 80.60 yen to 80.70, with 80.55 yen cited as 38.2 percent retracement of the pair's most recent rise from 79.07 yen on November 9 to its Thursday high.
The yen also edged higher against the euro, with the European unit buying 103.49 yen, down 0.2 percent and moving away from its two-week EBS high of 104.00 yen hit on Thursday. Resistance was seen at the euro's October 23 high at 104.59 yen, with the base of the weekly Ichimoku cloud at 104.77 yen viewed as the next resistance above that. Against the dollar, the euro inched down about 0.1 percent to 1.2770, but still well above Tuesday's two-month low of $1.2661.
Its Thursday high of $1.2802 was just below resistance at its 200-day moving average, now at $1.2810. Above that is 38.2 percent retracement of its October 17 high of $1.3140, which is at $1.2844. The Australian dollar was slightly lower at $1.0323, after touching a three-week low of $1.0303 on Thursday.