Forex - Japanese yen weaker ahead of BoJ policy in holiday-thinned trade

Investing.com - The Japanese yen weakened slightly ahead of a central bank review of policy later on Wednesday with markets in Asia gearing up for the Chinese New Year holidays, but with Greece still in focus.

USD/JPY traded at 119.32, up 0.005%, while AUD/USD changed hands at 0.7810, down 0.10%. EUR/USD was down 0.11% at 1.1398.

The Bank of Japan ends its two-day policy meeting today with a statement due around 1230 Tokyo time (0330 GMT). BoJ Governor Haruhiko Kuroda will host a news conference at 1530 (0630 GMT) to explain the board's decision.

The BoJ is likely to maintain its policy target as it is still monitoring the impact of the Oct. 31 easing on inflation expectations and the extent of wage hikes planned by some firms in fiscal 2015. The board is expected to upgrade its assessment of exports and factory output in its policy statement despite prospects for slower global growth, while cautiously watching whether weak consumption will recover steadily.

In Australia the January Westpac-MI Leading Index rose 0.08 point to 98.0, staying on a path of below trend growth.

Wednesday also marks the start of the Chinese New Year holidays. Markets in mainland China are already closed until Feb 25. Markets in Hong Kong will observe a shortened session today before holidays for the next two days.

Elsewhere in Asia, many regional markets will be closed from Thursday, and are due to re-open Feb. 23, although trading desks are due to be lightly staffed.

Overnight, the dollar trimmed earlier losses against the other major currencies on Tuesday, but the greenback remained under pressure as downbeat manufacturing data from the New York area added to concerns over the strength of the U.S. economic recovery.

In a report, the Federal Reserve Bank of New York said that its general business conditions index decreased to 7.8 this month from a reading of 10.0 in January. Analysts had expected the index to dip to 8.5 in February.

Separately, the National Association of Home Builders said its Housing Market Index decreased to a four-month low of 55.0 this month from 57.0 in January. Analysts expected the index to rise to 58.0 in February.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was quoted up 0.11% at 94.25.

Overnight, the euro found support after the ZEW Centre for Economic Research said that its index of German economic sentiment rose by 4.6 points to 53.0 this month from January’s reading of 48.4. It was the highest reading since February 2014, but was still below expectations of 55.0.

But investors remained cautious as Greece’s current €240 billion bailout is due to expire at the end of the month and the new Greek government does not want it extended. Athens rejected a proposed six-month extension of the bailout on Monday, calling it "unacceptable".

Athens has until Friday to request an extension otherwise its bailout will expire on February 28 and the country will run out of money.

The clash between Greece and its creditors has sparked fears that it could trigger the country’s exit from the euro zone. The European Central Bank was to decide whether to suspend emergency financial support for Greece later in the day.