By Bridge News
London--March 19--The following is a summary of overnight moves since Europe's close, plus possible leaders for the session ahead:
KEY ISSUES:
* BOJ policy decision awaited
* Japanese PM Mori to meet US President Bush. Will they discuss FX?

The USD ended US trading on Friday stronger despite poor housing starts data for February and another drop on Wall Street. However, it USD came under some pressure on Monday as EUR/JPY gains on continuing JPY weakness led the EUR higher and USD/Europe generally lower.
--USD/JPY hit a fresh 22-month high of 123.54, though the triggering of a 123.50 strike option failed to provide more upward momentum as Japanese exporters, European names and a US investment bank sold into the rise. The market is on alert for the BOJ's policy decision, though traders in Asia say a return to the zero interest policy has largely been discounted. However, the JPY could be hit if the BOJ announces measures which show it is caving in to political pressure to increase the money supply. BOJ Deputy Governor Fujiwara sounded a cautious note, saying the side effects of a return to the ZIRP must be considered and that the Bank will watch for any signs of a deflationary spiral. Fujiwara also said that it is difficult to adopt an inflation target.
As a senior official told BridgeNews on Friday, a range of US and Japanese officials said FX won't be on the agenda at the Mori-Bush meeting to be held later today though Japanese newspapers continued to speculate that the US would give Japan the go-ahead to adopt a weak JPY policy.
However, MOF vice minister Muto rejected such a policy, saying "artificially manipulating the yen is not appropriate." Japanese Ministry of foreign affairs press secretary Hattori added that Japan is not trying to "talk down" the JPY.
--The JPY's losses took EUR/JPY to a 4-day high of 110.77 before the cross dipped back on selling from US and European players.
--EUR/USD came off a 3-month low of 0.8912 in late US trading to hit 0.8986 before dipping back to 0.8934 on selling from European names and as EUR/JPY was sold. ECB council member and Belgian Nation Bank Governor Quaden, speaking on Friday, said ECB intervention to support the EUR was "effective" and helped stabilize the currency. Quaden added that he expects growth in the euro zone to slow slightly in 2001 due to a slowing of external demand, but that growth should "be in the region of 3%."
Monday is a light day for euro zone data though the EU Economic and Finance Committee meets to discuss the Lamfalussy Report.
--The GBP traded fairly quietly, but could come under a little pressure from reports UK's RBS might open friendly merger talks with Ireland's AIB. The Times newspaper reports the Ernst & Young ITEM Club as saying the UK would be able to join EMU soon if it wanted.