Euro Eases on Spain Concerns - Wall Street Journal

By TAKASHI MOCHIZUKI

The yen rose slightly in Asia on Tuesday due to settlements by Japanese exporters, but traders said the currency will likely weaken in the days ahead amid expectations for easing by the Bank of Japan and anti-Japanese rallies in China.

As of 0450 GMT, the dollar was at ¥78.64 from ¥78.71 in New York Tuesday, while the euro was at ¥103.00 from ¥103.19.

Traders said Japanese exporters were active yen buyers after a three-day weekend in Japan.

With the BOJ's two-day policy board meeting set to end Wednesday, traders said the yen will likely start to weaken as speculation grows that the central bank may take fresh monetary easing steps following the U.S. Federal Reserve's decision last week to take new easing steps.

"Hopes for more BOJ easing are high, especially among non-Japanese investors," said Hiroshi Maeba, head of FX trading at UBS in Tokyo.

Heightened geopolitical risk stemming from anti-Japanese demonstrations in China could also weaken the yen, traders said.

Analysts are also concerned that the anti-Japanese sentiment could ignite protests against the Chinese Communist Party, which could destabilize political conditions in the world's second-largest economy.

"Some investors are already pricing in the next developments in the anti-Japanese rallies, and that could include political chaos," said Yoichi Ito, chief analyst at Sumitomo Mitsui Trust Research Institute.

The euro was at $1.3099 from $1.3117 while the Wall Street Journal Dollar Index, which measures the dollar against a basket of currencies, was at 69.146 from 69.110.

Write to Takashi Mochizuki at takashi.mochizuki@dowjones.com