The yen stood near recent highs against the dollar after an opinion poll suggested that Prime Minister Junichiro Koizumi's party will be re-elected in Sunday's elections. A weekend poll by leading business daily the Nikkei said the Liberal Democratic Party may capture 250 of 480 seats in the Lower House of parliament. "The yen has been supported by weekend polls suggesting the LDP will be returned to power at this weekend's forthcoming elections in Japan with a majority of seats," said Mansoor Mohi-uddin, a currency strategist at UBS. As a result, the dollar slipped to a low of 108.77 yen, its lowest level since June 23. However, dealers said the yen was unlikely to be buoyed too much as the market had already factored in a Koizumi win. In addition, UBS' Mohi-uddin warned that the Nikkei index of leading shares may be pressured in coming weeks by the market's current high valuations. "The worry is that foreign buying may also be the only support for the market at this point," he said. "If this inflow moderates, possibly due to lower risk appetite in the global markets, the yen could be a relative underperformer," he added. Elsewhere, the dollar remained under pressure as US economic growth expectations have been lowered in the face of sky-high oil prices and the devastation caused by Hurricane Katrina. The market has scaled back its assessment of how aggressive the US Federal Reserve will be. The dollar has been buoyed for most of this year by a growing yield differential between the US and the 12-nation European single currency zone. Though oil prices have fallen in the wake of Friday's announcement by the International Energy Agency that oil reserves will be released, US yield expectations remain lower than they have been for some time. "It is the uncertainty over whether the Fed will pause that is likely to see the dollar remain weak in the near-term," said Derek Halpenny, analyst at The Bank of Tokyo-Mitsubishi. However, activity today has been subdued with US markets closed for the Labor Day holiday today and ahead of a relatively uneventful week in terms of data. The euro, meanwhile, reacted little to a very slight drop in a key measure of activity in the euro zone services industry, with the August services PMI index dipping to 53.3 from 53.5 in July, bang in line with analysts' expectations. The pound was little changed despite a weaker-than-expected services sector report from the Chartered Institute of Purchasing and Supply. Its main manager index of activity in the UK services sector dropped to 55.2 in August from 56.3 in July, below expectations for a more modest dip to 56.0. For the UK, the focus this week will centre on Thursday's interest rate decision by the Bank of England. UK rate-setters are fully expected to leave rates on hold at 4.50 pct this month, though market players will be looking for clues as to whether any further rate cuts will be forthcoming this year after last month's quarter point reduction