SYDNEY (Reuters) - The yen plumbed a 2-1/2 year low against the dollar on Monday, grabbing the Asian spotlight amid subdued trading for the region's stock markets, with the focus on Japan's central bank as it faced unrelenting political pressure to deliver bold stimulus.
Prime Minister Shinzo Abe on Sunday said the Bank of Japan (BOJ) must set a 2 percent inflation target and make it a medium-term, not long-term, goal to show markets it was determined to pursue bold monetary easing to end nearly two decades of deflation.
His comments emboldened yen bears, who took a fresh swipe at the currency. That saw the U.S. dollar hit a high of 89.67 yen, a level not seen since mid-2010, while the euro came within a whisker of 120.00 yen, scaling a 20-month peak.
"The confirmation that there's going to be a push for a new (BOJ) governor, that new governor is going to have a mandate of 2 percent inflation, that plus the fiscal stimulus is a major negative for the yen," said Callum Henderson, global head of FX research for Standard Chartered Bank in Singapore.
In contrast, equity markets had little news to go on, and MSCI's broadest index of Asia-Pacific shares outside Japan was barely changed, remaining near a 17-month peak set on Friday. Tokyo markets were closed for a public holiday.
Having staged a 2-percent rally at the start of the year on growing optimism about the health of the global economy, stock markets appeared to be pausing for confirmation of a brighter global growth outlook.
Australian's benchmark S&P/ASX 200 index rose 0.3 percent, Hong Kong's Hang Seng index advanced 0.4 percent and South Korea's KOSPI gained 0.2 percent, reversing earlier losses.
"The KOSPI will continue to be rangebound before U.S. housing data and China's GDP data are released later this week," said Kim Joo-yong, an analyst at Bookook Securities.
Analysts at HSBC believe global developments this week will support demand for riskier assets, with U.S. and Chinese data likely to show further momentum in the world's two biggest economies.
"In addition, the Fed speaker calendar is dominated by doves in the early part of the week. These should provide reassurance that the Fed is in no rush to turn off the liquidity tap despite these early signs of encouragement on activity," they said in a client note.
Federal Reserve Chairman Ben Bernanke is due to speak at the University of Michigan on Monday and investors are eagerly waiting for clues on how long the Fed's latest bond purchase program will last.
Any signs that the Fed is in no hurry to end its quantitative easing program could see the U.S. dollar soften further against higher-yielding currencies such as the Australian dollar and those of faster-growing emerging economies.
The Aussie dollar rose 0.1 percent to $1.0549, within easy reach of a four-month high of $1.0599 set last week.
The euro was up 0.4 percent at a fresh nine-month high of $1.3404, continuing to outperform the greenback after European Central Bank chief Mario Draghi last week gave no indication the bank would ease monetary policy any further.
Commodity prices found some traction after last week's decline. U.S. crude rose 60 cents to $94.16 a barrel, recovering from Friday's 26-cent fall, while Brent crude gained 32 cents to $110.96 a barrel.
Copper edged up 0.4 percent to $8,075 a metric ton and gold was a shade firmer at $1,665 an ounce.
Yen under pressure, Asian stocks subdued
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Yen under pressure, Asian stocks subdued
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Yen under pressure, Asian stocks subdued
