The euro fell 0.4 percent to 122.59 yen <EURJPY=R>, off a
two-week high of 123.90 yen struck on EBS on Monday.
The euro also dropped against the dollar, dipping 0.1 percent
to $1.3615 <EUR=> but was still well off last week's $1.3433, its
lowest in more than nine months.
The euro struggled after Greek Prime Minister George
Papandreou warned on Monday that if the Greek crisis worsened it
could lead to a new global financial meltdown. [ID:nLDE6271WD].
Sterling fell 0.3 percent to $1.5014 <GBP=D4> and shed 0.7
percent to 135.08 yen <GBPJPY=R>.
Data showing that British house prices grew last month at
their slowest pace since August weighed on sterling.
[ID:nLAG006161]
Another negative factor for sterling was a Moody's Investors
Service report saying Britain faces a difficult balancing act in
deciding how and when to reduce support for the banking sector,
given growth in the UK's public debt burden. [ID:nLDE6271OB]
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EYES ON BOJ MEETING
The dollar fell 0.3 percent to 90.01 yen <JPY=>.
The greenback had rallied on the yen to a two-week high of
90.69 yen on EBS on Monday, after a better-than-expected U.S.
jobs report backed views that the U.S. Federal Reserve will lift
rates faster than the Bank of Japan.
The report had also bolstered demand for higher-yielding
currencies and riskier assets like stocks and commodities, on
improved economic prospects.
The Australian dollar fell 0.3 percent against the yen
<AUDJPY=R> and the New Zealand dollar shed 0.6 percent
<NZDJPY=R>.
The dollar is likely to be supported at levels around 89.50
yen on speculation about more monetary easing steps from the BOJ,
possibly at its policy meeting next week, said a trader for a
Japanese trust bank.
The BOJ meeting is in the spotlight after the Nikkei
newspaper reported on Friday that the BOJ was examining easing
again and may decide on such a move when it meets on March 16-17.
Sources familiar with the matter said the BOJ is likely to
debate this month easing its ultra-loose monetary policy again.
[ID:nTOE6230A7]
The most likely next step for the BOJ is to expand the
fund-supply operation it put in place in December, under which it
lends to banks at 0.1 percent, either by increasing the size from
10 trillion yen ($110.7 billion) or extending the duration of
loans from the current three months.
Even if such steps are taken, the market impact could be
limited given how low yen money market rates are already, said a
trader for a European bank.
"Basically, the aim may be to achieve an announcement effect
and the market has factored in a lot of that," the trader said,
adding that the dollar could fall against the yen if the BOJ
stands pat and unveils no new measures.
(Additional reporting by Anirban Nag in Sydney, Satomi Noguchi
and Kaori Kaneko in Tokyo; Editing by Edwina Gibbs)