NEW YORK (Reuters) - The Japanese yen reached more than one-week highs against the U.S. dollar on Tuesday as traders reduced expectations of how much new stimulus authorities will inject into Japan's ailing economy.
Most economists surveyed by Reuters expect the Bank of Japan to expand its asset purchases and cut rates further below zero at a two-day meeting that ends on Friday.The government is also putting together a spending package that some believe could be worth up to 20 trillion yen ($190 billion). Direct fiscal stimulus may be much lower, however, with a Nikkei report on Tuesday citing a figure of around 6 trillion yen over the next few years.“The market came into yesterday very optimistic both on fiscal and monetary moves,” said Steven Englander, global head of foreign exchange strategy at Citigroup in New York. But, “the headlines coming out have thrown a lot of cold water on the view that they are going to do something aggressive.”Comments by Japan's finance minister, Taro Aso, also raised concerns that the government will not work as closely with the BOJ as investors had hoped to implement new stimulus."We had a move on the comments overnight from the finance minister," said Vassili Serebriakov, FX strategist at Credit Agricole in New York.The yen gave back some gains during the U.S. session as some investors saw the pullback as a dollar-buying opportunity, and before the Federal Reserve concludes a two-day meeting on Wednesday."The market is still inclined to buy pullbacks in dollar/yen," said Serebriakov.The yen gained 1.7 percent against the dollar to 103.995