TOKYO: The euro crept higher in Asian trade on Tuesday as dealers kept their eyes on the European and Australian central banks for signs of policy moves, while the dollar held its ground.
The eurozone common currency bought $1.2400 and 97.04 yen, from $1.2399 and 96.97 yen in New York trade late Monday.
The dollar held steady against the Japanese currency, buying 78.21 yen from 78.20 yen in US trade, after the US Department of Labor said last week that the world's biggest economy created more jobs in July than expected.
On Tuesday, traders were focused on the Reserve Bank of Australia (RBA), which was to announce the outcome of its board meeting at 0430 GMT, said Osao Iizuka, head of FX trading at Sumitomo Mitsui Trust Bank.
"Although the RBA could sit pat on monetary policy, any reference signalling an end to its easing trend could buoy the Australian dollar and the euro," he said.
But the euro may lack further upward momentum in the absence of fresh cues, Iizuka said, amid continuing guesswork on the path of the eurozone crisis and any near-term policy moves by the European Central Bank.
Currency markets largely shrugged off an intensifying political drama in Japan, with opposition threats to hold up a controversial tax bill having little impact on the yen, dealers said.
The opposition Liberal Democratic Party has threatened a no-confidence motion against Prime Minister Yoshihiko Noda, which may stall a plan to double Japan's sales tax by 2015, unless the premier promises to hold snap elections.
Supporters of the bill said the rise was crucial to chopping Japan's massive public debt, with markets pricing in the strong likelihood the new law will pass, said Tomoko Fujii, senior FX strategist at Bank of America-Merrill Lynch in Tokyo.
"If the tax bill fails to pass and is scrapped, that would have a huge impact on the markets by inviting a spike in (Japanese government bonds) yields and a weaker yen," Fujii said.
"But the market doesn't see that happening. People are optimistic that lawmakers can compromise in some way."
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