Forex - Yen weaker in Asia as Kiuchi questions policy, AUD down on Lowe

Investing.com - The yen weakened along with the Aussie in Asia on Thursday on comments from policy makers at both central banks and data in Australia that gave a mixed outlook ahead of a key European Central Bank meeting later in the day.

The Australian dollar traded stronger on Thursday early in Asia ahead of trade and retail sales.

AUD/USD traded at 0.7811, down 0.08%, while USD/JPY changed hands at 119.81, up 0.10%. The US dollar index was quoted at 96.02, up 0.04%.

EUR/USD changed hands at 1.1074, down 0.04%, in Asia.

Australia's trade balance for January reached a deficit of A$980 million, wider than the A$950 million deficit seen, while retail sales for the same month rose 0.4%, matching expectations.

Separately, Reserve Bank Deputy Governor Philip Lowe said Thursday that more support on the monetary policy side may be required, hinting strongly the central bank may cut further from a record low 2.25% cash rate it held steady this month.

More support may be required, Lowe said at the Goldman Sachs (NYSE:GS) annual international macro-economic conference at Sydney. The RBA lowered the cash rate 25 basis points in February because it believed it appropriate to provide additional support to demand, Lowe said.

"This was not because things had turned for the worse but rather because of the lack of compelling signs that economic growth was picking up - as was earlier expected," Lowe said.

Still, the exchange rate remains relatively high given the overall state of the economy because of the scale of international monetary stimulus, he said.

"The end result here is that global developments have left us with a higher exchange rate and lower interest rates than would otherwise have been the case. We may not like this configuration but developments abroad give us little choice," he added.

Separately, Bank of Japan board member Takahide Kiuchi, who opposed the Oct. 31 further easing, called for looking at shifting policy away from supporting assets like government bonds and the stock market. He called for a review on the feasibility of massive buying of government bonds.

Overnight, the U.S. dollar rose to its highest level against the euro on Wednesday in more than 11 years, ahead of the European Central Bank's announcement on Thursday detailing the start of its €60 billion a month quantitative easing program.

The continuing decline comes on the eve of Thursday's ECB meeting where policymakers are expected to release critical details on a monetary easing program that was passed last month.

Among the topics expected to be discussed at the meeting in Cyprus include: projections for inflation and growth, the length and scope of the program, as well as projections for when interest rates could rise again in Europe.

Also on Wednesday, Greece announced the auction of 1.138 billion in six-month Treasury bills, allowing it to refinance a maturing issue. The Treasury bills were sold at a yield of 2.97%, up from 2.75% at a prior sale last month.

U.S. stocks, meanwhile, fell amid a flurry of mixed economic data.

In its monthly National Employment Report released on Wednesday, payroll services firm ADP said that the private sector added 212,000 non-farm jobs in February, just below forecasts of a 220,000 gain. For the month of January, private payrolls were revised upward to 250,000 from a previously reported total of 213,000.

Elsewhere, the U.S. Services sector recorded its highest activity level since October, as the Markit Purchasing Managers Index (PMI) rose to 57.1 from a January reading of 51.7. The final number also exceeded a monthly forecast of 54.8.

The Institute for Supply Management (ISM) also said on Wednesday that its services index climbed to 56.9 for February, up from a reading of 56.7 a month earlier.