Weekly Recap: Yen Suffers from Stimulus Speculations
The Japanese yen suffered this week, falling against all other most-traded currencies, on speculations that Japan will have new leadership that will demand more aggressive easing from the nation’s central bank. Even poor fundamental news did not lift the currency.
Prime Minister Yoshihiko Noda surprised everyone this week, dissolving the parliament. Most analysts believe that the resulting elections will bring the opposition Liberal Democratic Party to power. The party’s leader Shinzo Abe was calling the Bank of Japan for additional actions to stimulate the economy, meaning that the victory of the LDP will likely result in further easing of the monetary policy.
The Japanese currency did not manage to rise even among widespread risk aversion on the Forex market. The news from Europe was persistently bad and the eurozone remained in recession, but that was not the most important reason for the negative market sentiment. Fears of the fiscal cliff in the United States — that was the major source of investors’ aversion to risk. Friday brought some positive developments though as President Barack Obama said that he and the Congress agreed to “find solutions and take action as soon as possible”.
USD/JPY jumped from 79.74 to 81.23 — the highest closing price since April 25. EUR/JPY advanced from 101.01 to 103.46. GBP/JPY climbed from 126.38 to 129.07.
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Earlier News About the Japanese Yen:
- Yen Stays Weak After Noda Dissolves Parliament (2012-11-16)
- Yen Drops on Speculations About Elections in Japan (2012-11-15)
- Japanese Yen Gains as Risk Aversion Returns (2012-11-13)
- Japanese Yen Regains the Upper Hand as Risk Aversion Reigns (2012-11-09)
- Yen Gains on Concerns About Europe's Crisis & US Fiscal Cliff (2012-11-08)