Yen continues to slide

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IOL pic aug29 asian markets yen Associated Press File picture: Eugene Hoshiko

Tokyo - The yen extended its slide in Asia on Wednesday as the dollar won support from upbeat US manufacturing data and the Bank of Japan kicked off a two-day policy meeting.

In midday Tokyo trade, the greenback bought 105.18 yen, from 105.10 yen in New York and below the 105-yen level in Tokyo earlier on Tuesday.

The euro rose to $1.3134 and 138.16 yen against $1.3132 and 138.02 yen in US trade, as investors turn their focus to Thursday's European Central Bank (ECB) meeting.

On Tuesday, the Institute for Supply Management said activity in the US manufacturing sector picked up pace in August to its best level since August 2011.

The figures were the latest to suggest that the world's number one economy was cementing a recovery, with investors now turning to the Federal Reserve's Beige Book regional economies report as well as US jobs data on Friday.

“The US dollar has been doing some heavy lifting... amid a stronger-then-expected US ISM Manufacturing report for August signalling manufacturing is doing its piece to further fire up the US economy though the second half of this year,” National Australia Bank said.

Traders were also keeping an eye on a Bank of Japan policy meeting that wraps up on Thursday, on the back of growing speculation that weakness in the world's number three economy would force Japan's central bankers to unleash further stimulus measures.

Japan and the eurozone have both recorded poor economic data recently, boosting expectations of further monetary easing which would tend to weaken their respective currencies.

The euro has been sinking for two months straight against the greenback as worries returned of recession and deflation in the eurozone.

At the same time the Fed is being urged in some quarters to raise interest rates - which would lift the dollar - as the economy shows regular signs of getting back on track. - AFP

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