The yen clawed higher against the dollar on Friday, getting some respite after having fallen sharply over the past two weeks on expectations of more forceful monetary easing in Japan. The euro also strengthened against the dollar, supported by expectations that international lenders will soon reach a deal to release the next tranche of aid for cash-strapped Greece.
The dollar eased 0.2 percent versus the yen to 82.28 yen, pulling away from Thursday's 7-1/2-month high of 82.84 yen, the dollar's strongest level since early April. The dollar has climbed roughly 3.5 percent against the yen in the last two weeks, with the yen weakened by expectations that a likely new Japanese government in December would push the Bank of Japan to implement more drastic monetary stimulus.
Shinzo Abe, the leader of Japan's opposition Liberal Democratic Party (LDP), which is tipped to win a general election on December 16, has called for measures such as having the BOJ buy bonds issued specifically to fund public works projects and pushing short-term interest rates below zero. The yen also stabilised against the euro. The single currency eased 0.1 percent versus the yen to 106.09 yen, staying below a seven-month high of 106.585 yen struck on Thursday.
Against the dollar, the euro edged up 0.1 percent to $1.2891. The euro has gained a boost after German Chancellor Angela Merkel said on Wednesday that an agreement to release aid to Athens was possible next Monday. Expectations for a deal on Greece on Monday, when the country's international creditors will hold another round of talks, have been buttressed further by comments from Olli Rehn, the European commissioner for economic affairs. Germany has led resistance within the euro zone to calls from the International Monetary Fund and others to accept losses on their Greek debt holdings.
Later on Friday, the euro could take its cues from data on German business morale. The Ifo business climate index, a key barometer of economic health in Germany, is seen slipping to 99.5 in November, down from 100.0 last month, according to a Reuters survey.
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