Yen slides on Japanese stimulus bets

AFP

The yen on Thursday slid to its lowest level in about six weeks on expectations of fresh stimulus from the Japanese government and central bank, ahead of a European Central Bank meeting later in the day.
Japan’s currency has lost most of the sharp gains it made in reaction to Britain’s June 23 vote to exit the
European Union, which sparked
buying of safe assets.
On Thursday, Japanese media said Tokyo was readying a package of at least 20 trillion yen — twice as much as earlier reported — to kickstart the world’s number-three economy, fend off deflation and counter any negative effects of the Brexit.
Traders are positioning ahead of next week’s Bank of Japan policy meeting, with some expecting more easing measures that would weaken the yen.
In Tokyo, the dollar rose as high as 107.49 yen from 106.87 yen in New York on Wednesday, its highest since early June and before Britain’s referendum, while the euro climbed to 118.19 yen from 117.72 yen.
“The yen has already sold off a lot in anticipation of the government’s fiscal stimulus package and next week’s BoJ meeting,” David Forrester, a foreign-exchange strategist at Credit Agricole SA’s corporate and investment-banking unit in Hong Kong, said.

“We’re looking for it to continue tracking lower.”
The euro ticked up to $1.1034 from $1.1016 ahead of the ECB meeting. While the bank is not expected to make any major policy announcements, there is speculation its chief Mario Draghi will promise support to markets or flag fresh stimulus.