Dollar tops 114 yen in Asia after US mid-term election results after BoJ-sparked rally slows

TOKYO: The dollar topped 114 yen on Wednesday afternoon in Asia, after results from US midterm elections showed that Democrats suffered a thumping defeat.

In Tokyo afternoon trading, the greenback rose to a seven-year high of 114.06 yen, against 113.63 yen in New York Tuesday.

The euro strengthened to $1.2558 and 143.23 yen, from $1.2545 and 142.55 yen in US trade, despite the European Commission slashing its growth outlook for this year.

Late Tuesday, Republicans stormed to victory in US midterm elections, thumping rival Democrats to clinch control of both houses of Congress and assuring a fractious final two years of Barack Obama's presidency.

Riding a wave of frustration with Washington incumbents and the unpopular policies of the Obama administration, Republicans seized at least seven seats from Senate Democrats to claim the majority in both chambers of Congress for the first time since 2006.

The dollar has been stuck in neutral earlier Tuesday, following a rally driven by the Bank of Japan's surprise stimulus expansion last week.

The yen -- hit by Friday's BoJ announcement to expand its huge stimulus to 80 trillion yen annually -- on Monday sank past 114 against the dollar, a level last seen in 2007.

On Wednesday afternoon, BoJ governor Haruhiko Kuroda said the central bank will do whatever it can to beat years of growth-sapping deflation, and warned that "half-baked" measures would only worsen the problem.

But weighing on sentiment, the US Commerce Department said Tuesday that new orders for manufactured goods fell and the trade deficit widened.

Analysts said last week's initial estimate of growth in the third quarter, which came in at 3.5 percent, was likely overstated by as much as 0.4 percentage points, and that the current quarter would be slower.

Also Tuesday, the European Commission cut its eurozone 2014 growth forecast to 0.8 percent from 1.2 percent, and its 2015 estimate to 1.1 percent from 1.7 percent.

Traders would now turn their focus to the European Central Bank's policy meeting later this week, with analysts looking for some guidance on its plans for kickstarting the economy.

"Unless eurozone growth momentum slows considerably further, there does not appear to be much room of further rising ECB easing expectations, especially when it comes to more aggressive policy measures such as quantitative easing," Credit Agricole said.

The greenback was mixed against other Asia-Pacific currencies.

It strengthened to Sg$1.2909 from Sg$1.2897 on Tuesday, to Tw$30.52 from Tw$30.49, to 1,081.60 South Korean won from 1,079.35 won, and to 32.72 Thai baht from 32.67 baht.

The dollar eased to 61.38 Indian rupees from 61.40 rupees, to 44.89 Philippine pesos from 44.93 pesos, and to 12,115.00 Indonesian rupiah from 12,120 rupiah.

The Australian dollar rose to 87.36 US cents from 87.26 cents, while the Chinese was stronger at 18.64 yen against 18.58 yen.