Yesterday the yen erased losses after reaching a four-week low versus the dollar as investors speculated the Bank of Japan unexpected monetary stimulus expansion will do little to augment economic growth.

The yen strengthened against almost all of its 16 most- traded counterparts even after policy makers added 10 trillion yen ($127 billion) in stimulus, following measures by the Federal Reserve and European Central Bank this month.

Earlier, the yen fell to four-week low against the dollar after the Bank of Japan unexpectedly announced the expansion of the program of monetary stimulus to support growth and reduce the value of the currency. The yen weakened against most of its 16 major counterparts after the central bank said it will increase the amount of asset purchase program, which is the main tool of monetary easing in the conditions close to zero interest rates, up to 80 trillion yen from 70 trillion yen and to extend its action for six months, until the end of 2013.

The euro rose against the dollar amid rising stock markets after existing home sales in the U.S. rose the most in a year. Thus, sales in the secondary market amounted to 4.82 million in August, is expected to 4.55 million Also today, the ECB held an auction to provide dollar liquidity to the tune of 3.72 billion dollars at 0.64% for 7 days. Data on the volume of construction in the euro zone at an annual rate in July showed a decline of -4.7%.