FOREX: Yen wallows near record lows on cautious Bank of Japan stance

TOKYO - The yen languished near record lows to the euro and Swiss franc on Monday as the lack of hawkish signals from the Bank of Japan emboldened traders, even as Japanese officials stepped up warnings about currency intervention.

The Japanese currency also loitered near an 11-month trough against the U.S. dollar and was just shy of a 17-month low on the Aussie.

Early on Monday in Tokyo, both top currency diplomat Atsushi Mimura and chief government spokesperson Minoru Kihara said they were concerned about "one-sided and sharp" currency moves, and cautioned that officials were ready to "take appropriate actions," making a widely recognized hint at intervention.

On Friday, the central bank raised the policy rate by a quarter point to a three-decade peak of 0.75%, in a clearly telegraphed move. But while the accompanying statement signalled a readiness to continue tightening policy, BOJ Governor Kazuo Ueda stuck to his usual cautious rhetoric in his news conference.

The lack of any hawkish hints sent the yen tumbling 1.3% versus the euro, 1.4% against the greenback and 1.5% against the Aussie, even as it triggered a broad selloff in Japanese government bonds that sent the 10-year yield - which moves inversely to the price - soaring past the symbolic 2% mark to the highest since 1999.

Ueda is due to speak at Japan's Keidanren business lobby on Christmas Day, offering markets another opportunity to parse any policy clues.

"While the BOJ statement noted that real yields remain 'significantly low' - potentially signalling further tightening ahead - Governor Ueda's press conference offered little new insight, reiterating a data-dependent approach," Tony Sycamore, an analyst at IG, wrote in a client note.

"The absence of clearer guidance on the pace of future hikes disappointed markets, triggering yen selling."

A decisive break above 158 yen per U.S. dollar would open the way to the high for the year from January at around 158.87, he said.

The U.S. dollar edged down 0.3% to 157.37 yen on Monday, but remained close to last month's high of 157.90.

The euro eased 0.1% to 184.42 yen, staying within touching distance of Friday's record peak at 184.75. The single currency was 0.1% stronger at $1.1720.

The Swiss franc rose 0.4% to 197.91 yen after touching a record 198.22 yen early in the session.

The Aussie was 0.6% firmer at 104.16 yen , having earlier reached the strongest levels against the yen since July of last year.

The Aussie-yen pair "still has fundamental support from solid risk sentiment and more recently, by wider interest rate differentials between Australian and Japanese ten-year government bond yields," Commonwealth Bank of Australia analysts wrote in a client note, forecasting a rise to 109 yen per Australian dollar by March.

Kevin Buckland and Gregor Stuart Hunter/Reuters