Yen Falls As BoJ Sakurai Says Current Monetary Easing Required

The Japanese yen declined against its major counterparts in early European deals on Wednesday, as the Bank of Japan board member Makoto Sakurai remarked that the bank should maintain its monetary easing in the current framework.

Sakurai said price movements are weak and there is a long way to go to achieve the inflation target of 2 percent. The bank should take this point seriously, he noted.

Sakurai said the bank should not change its 2 percent inflation target. It contributes to stabilize foreign exchange rates in the long run and also to achieve price stability.

The BoJ board holds next monetary policy meeting on October 30 and 31, when it will publish inflation forecasts.

Japanese parliamentary elections are due on Sunday, with investors expecting the ruling coalition to attain victory. Opinion poll conducted by Kyodo News forecast that Abe may win two-thirds of seats in the lower house.

The currency was also weighed by risk appetite, as European shares rose on a higher dollar amid speculation over next Fed Chair and as China pledged to deepen economic and financial reforms.

The currency has been trading lower against its major rivals in the Asian session, with the exception of the pound.

The yen weakened to 114.94 against franc and 148.63 against the pound, from its early highs of 114.60 and 147.90, respectively. The next possible support for the yen is seen around 116.00 against the franc and 150.00 against the pound.

The yen hit a 2-day low of 132.38 against the euro, 8-day low of 112.73 against the greenback and a 5-day low of 89.99 against the loonie, off its early highs of 131.96, 112.14 and 89.55, respectively. If the yen falls further, it may find support around 134.00 against the euro, 113.5 against the greenback and 91.00 against the loonie.

The yen that closed Tuesday's trading at 88.01 against the aussie slipped to a 2-day low of 88.21. The yen is seen finding support around the 89.00 region.

Looking ahead, U.S. building permits and housing starts for September as well as Canada manufacturing sales for August are due in the New York session.