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Yen Recovers On Risk-aversion As EU Finance Chiefs Defer Greece Decision

11:00, 21st November 2012

(RTTNews) - The yen recouped early Asian session losses across the board in late trading Wednesday on increasing safe-haven flows into it following reports that the euro zone finance ministers deferred their decision to Monday on the next tranche of loans to Greece.

The Eurogroup has made progress in identifying a credible package of measures to bring Greek debt to sustainable level, Eurogroup President Jean-Claude Juncker said today.

The euro area finance ministers will meet again on November 26 to complete "further technical work on some elements of this package," Juncker said in a statement issued after the ministers' meeting in Brussels.

The meeting was expected to take a final decision on next Greek aid tranche as well as on closing the funding gap left by a two-year extension of its bailout program.

The Eurogroup commended the "considerable efforts" made by the Greek authorities and citizens and said "all prior actions required ahead of this meeting have been met in a satisfactory manner."

The yen was a clear underperformer in early Asian deals as traders continued to expect additional easing from the Bank of Japan in its December meeting.

The yen has been the weakest currency for the past few days after Prime Minister Yoshihko Noda called an election on December 16. The yen selling intensified following the Japanese opposition leader Shinzo Abe called last week for unlimited monetary easing to counter deflation.

On Tuesday, the Bank of Japan decided to keep the key interest rate and its asset purchase program unchanged after expanding the stimulus for a second straight month in October, defying mounting political pressure to pursue more monetary easing.

In economic news, Japan saw a merchandise trade deficit of 549.0 billion yen in October, the Ministry of Finance said today, reflecting the results of slowing exports to China in a territorial island dispute. That was well shy of forecasts for a shortfall of 360.0 billion yen following the downwardly revised deficit of 561.7 billion yen in September.

The yen appreciated 0.31 percent to 81.72 against the US dollar from early Asian session's 7-1/2 month low of 81.98.

The Federal Reserve Chairman Ben Bernanke warned yesterday that the Fed does not have the tools to offset the negative impact of the U.S. going over the fiscal cliff.

The yen rebounded from early Asian session's fresh multi-month lows against the major currencies of Europe in late Asian deals Wednesday, rising as much as 130.05 against the pound, 86.45 against the Swiss franc and 104.13 against the euro from previous lows of 130.57, 87.24 and 105.09, respectively.

The Japanese unit gained ground against the commodity dollars too, rising to 84.56 against the Australian dollar, 81.83 against the Canadian dollar and 66.44 against the New Zealand dollar. This was up from early Asian session's new multi-month lows of 85.08 against the aussie, 82.25 against the loonie and 66.91 versus the kiwi.

Looking ahead, the Bank of England minutes and the U.K. public sector finances for October are the key data to watch in the European session.

The U.S. weekly jobless claims for the weekended November 17, the University of Michigan's consumer confidence for November and leading index for October are expected in the North American session.

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