The dollar made further headway against the Japanese yen Thursday, prompting one broker to sharply lift its target for the currency pair. Broadly, the ICE dollar index , which measures the greenback against a basket of six other currencies, reached 80.628 Thursday, up from 80.514 in late North American trading on Wednesday. Against the yen, the dollar bought ¥88.05 in Asian hours, up from ¥87.78 in late North American trading on Wednesday. After a brief bout of weakness earlier in the week, the dollar found fresh legs during Asia trading hours on Wednesday, continuing along a path that has seen the yen fall sharply since October. That weakness in the yen has been prompted by expectations that Japan's new government will prod the country's central bank into fresh easing measures to help the ailing Japanese economy. “It is clear that the Japanese authorities have a fresh determinism to weaken the Japanese yen," said Mitul Kotecha at Credit Agricole. Kotecha referenced recent news that Japan has purchased bonds issued by the European Stability Mechanism and reports of ongoing pressure on the Bank of Japan to implement a 2% inflation target as fresh signs that Tokyo is serious about weakening the currency. “Reflecting these factors and the higher starting point for [the dollar against the yen], we have revised our forecasts and now look for the currency pair to end 2013 at ¥92.00 versus ¥85.00 previously," he said. Still, the path toward that level may not be smooth. The yen's drop against the U.S. dollar since October “looks excessive," Kotecha said."especially as it has largely been driven by expectations rather than actual policy change. There is scope for disappointment should policy be less aggressive than hoped for." Meanwhile, the euro also gained against the yen Thursday, trading at ¥114.89, up from ¥114.78 late Wednesday. Against the dollar, the euro slipped to $1.3049, down from $1.3065, with the European Central Bank due to release its monthly interest-rate decision later Thursday. Various surveys of economists from Dow Jones Newswires and others show only a handful of ECB watchers now expect the institution to cut interest rates. The central bank's first decision of the year is due at 7:45 a.m. U.S. Eastern time Thursday (1:45 p.m. Frankfurt time). Similarly, the Bank of England also meets Thursday, and the British pound traded modestly lower at $1.6011, down from $1.6034 in late North American trading. The Australian dollar reached $1.0543, up from $1.0518 recorded in late trading Wednesday, boosted by the release Thursday of much stronger-than-expected trade data from key trading partner China. Marketwatch
