Yen drops in Asia

The yen dropped on Friday after month-end selling from Japanese firms triggered more stop-loss selling, but concerns about the deadlock over the US "fiscal cliff" helped to keep it above last week's 7-1/2-month low versus the dollar. The euro stayed near a one-month high against the dollar and hit a seven-month high against the yen, helped by falling Italian and Spanish bonds yields.
The dollar rose 0.3 percent to 82.36 yen, edging closer to last week's peak of 82.84 yen. The dollar was up more than 3 percent this month due to speculation that the Bank of Japan will come under intense political pressure to ease monetary policy aggressively if the opposition Liberal Democratic Party (LDP) wins an election for the lower house on December 16. The euro also rose to seven-month high of 107.29 yen and last stood at 107.13 yen, about 0.6 percent above the late US levels.
The market showed little reaction to comments from LDP leader Shinzo Abe that some traders regarded as a softening of his earlier calls on the BoJ to take radical steps to ease policy. "Abe seems to be toning down a bit. For now it's hard to expect him to say something that would further boost speculation of more easing," said Barclay's Yamamoto.
The yen's fall on Friday, according to Tokyo-based traders, was due to month-end selling by Japanese companies that triggered some stop-loss selling. While many market players see the yen beginning a long-term downtrend due to the country's trade deficit and chances of more BoJ easing, in the near term the trend could be slowed by concerns over the political impasse between Democrats and Republicans in Washington over how to avert the "fiscal cliff".
"If there is no progress in the US debt talks, the dollar is likely to fall below 82 yen next week," said Masafumi Yamamoto, chief FX strategist at Barclays in Tokyo, noting recent US economic data had not been as solid as before. The euro stood near one-month high of $1.3015 hit on Thursday, changing hands at $1.2995, up slightly from late New York levels. The euro has also been helped by fall in Spanish and Italian bond yields in recent weeks, as well as relief after Greece's international lenders agreed on an aid deal for Athens earlier this week.