TOKYO: The dollar lost ground in Asian trade Wednesday following the Bank of Japan's latest easing measures and a massive storm in North America which may boost US President Barack Obama's re-election chances.
The greenback bought 79.54 yen in Tokyo morning trade against 79.61 yen in New York late Tuesday, an unexpected boost for the yen following the BoJ's latest stimulus, which would generally weigh on the unit.
The euro, meanwhile, was mixed at $1.2962 and 103.14 yen against $1.2959 and 103.18 yen in US trade.
Hurricane Sandy ripped along the US East Coast, effectively shutting down New York City and Wall Street trading, but European markets rallied with investors' risk appetite rising, dealers said.
"Indeed, the witticism that, 'If there is a God, he is a Democrat' has resonated, with a sense that this natural disaster gifts the president the ability to simply look presidential, improving his re-election chances in the process," National Australia Bank said.
"This has been reflected in a softer US dollar, albeit helped by some direct support for the euro from fairly well received Italian bond auctions and Spanish Q3 GDP data" it said in a note.
Official data Tuesday showed Spain's economy shrank by a quarterly rate of 0.3 percent, better than the previous quarter's 0.4-percent decline.
Citibank Japan chief strategist Osamu Takashima told Dow Jones Newswires that the dollar entered a near-term "correction phase" after its recent gains which were driven by speculation for more easing by Japan's central bank.
On Tuesday, the BoJ unveiled $138 billion in fresh monetary easing, its latest volley in a battle to kickstart the world's third-largest economy which it also warned would grow 1.5 percent in the year to March, much lower than its earlier 2.2 percent growth forecast.
Policymakers expanded an asset-purchase programme -- its main policy tool -- by 11 trillion yen ($138 billion) to 91 trillion yen, while keeping rates unchanged at between zero and 0.1 percent.
The BoJ's move was its second since central banks in the United States and debt-hit Europe announced huge policy easing measures in September to stoke growth.
The programme is aimed at injecting liquidity into markets through purchases of government and corporate bonds, and commercial paper, with the latest move aimed squarely at countering a slowing global economy.
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