SINGAPORE, Nov 1 (Reuters) – The battered yen found a footing on Wednesday on renewed threats of intervention from Japan and as investors turned their focus toward a Federal Reserve policy meeting later in the day.<\/p>\n\n\n\n
U.S. interest rates are expected to stay on hold, though the release of Treasury refunding details<\/a> may move the bond market.<\/p>\n\n\n\n Having dropped 1.7% on Tuesday to a one-year low of 151.74 per dollar, the yen stabilised at 151.32 in Asia trade, following more\u00a0pointed-than-normal remarks<\/a>\u00a0from Japan’s top currency diplomat, Masato Kanda.<\/p>\n\n\n\n “Speculative trading seems to be the biggest factor behind recent currency moves,” Kanda told reporters in Tokyo, adding authorities were “on standby” to respond.<\/p>\n\n\n\n The Bank of Japan raised inflation forecasts<\/a> on Tuesday, but not policy rates. It redefined its 1% limit on 10-year government bond yields as a reference rate, rather than a hard cap.<\/p>\n\n\n\n In the market, that tweak to policy wasn’t regarded as enough to close the wide interest rate gaps between Japan and other countries that has been responsible for the yen’s 13% decline this year.<\/p>\n\n\n\n “Let’s not forget that BOJ is normalising policy from ridiculously low levels,” said Claudio Irigoyen, global head of economics at Bank of America Global Research.<\/p>\n\n\n\n “It’s still the case that interest rate differentials are widening significantly in favour of the U.S. So the normalisation … is relatively fast for BOJ standards, but relatively slow relative to what we are seeing in the rest of the world.”<\/p>\n\n\n\n Deutsche Bank macro strategist Alan Ruskin said the slide in the yen, despite the BOJ tweak, shows it’s more evident than ever that a turnaround in the dollar\/yen rate is likely to be driven by the dollar and the state of the U.S. economy.<\/p>\n\n\n\n It has also traded weaker than 160 per euro for the first time since 2008 on Tuesday, before recovering a little to 159.92 on Wednesday.<\/p>\n\n\n\n Other currency moves were mostly modest, though the New Zealand dollar slipped 0.3% to $0.5808 and was nearing a one-year low as softer-than-forecast employment data<\/a> cemented expectations of an end to interest rate hikes.<\/p>\n\n\n\n Sterling slipped to $1.2125 and the euro – hurt by Tuesday’s slightly disappointing European growth figures – fell 0.1% to $1.0567.<\/p>\n\n\n\n “The data show the (European Central Bank’s) 450 basis points of interest rate hikes … are working to restrict demand,” said CBA analyst Carol Kong. “We estimate the Eurozone economy is now in recession.”<\/p>\n\n\n\n