Gains against the yen pushed the dollar up 0.1 per cent against a basket of currencies before a policy announcement from the Federal Reserve later in the day.
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Some have said that if BOJ runs out of easing options, it could turn to extraordinary measures such as helicopter money, but the governor of BOJ last week discounted helicopter money policy. This would be more than expected earlier, but critics will be watching to see how much is actually new spending.
Still, some analysts expressed skepticism the U.S. central bank would lift rates before December.
Japanese stocks rallied sharply Wednesday after reports indicated Prime Minister Shinzo Abe was preparing for a ¥28 trillion stimulus package.
Deutsche Bank chief executive officer John Cryan signaled more costs cuts are ahead for Germany’s largest lender as the bank announced net income decreased to €18 million ($20 million) from €796 million a year earlier, with a slump in trading revenue accounting for much of the fall in profits.
The dollar was down 0.3 per cent at 105.05 yen, with caution over potential monetary easing by the Bank of Japan limiting the greenback’s losses. Investors were awaiting a policy statement by the Federal Reserve, as strong US economic data raised questions over the likely course for interest rates.
“As far as the Fed goes and reaction to that, really it’s just confirmation that we’re not going to see rapid rate hikes in the United States”, said Nick Tvedt, senior corporate FX dealer at NZForex. It rose to 64.25 euro cents from 63.99 cents.
“So far it looks like the Bank of Japan is not ready to do something new and that leaves the potential for more downside for the dollar before the meeting on Friday”, said Thu Lan Nguyen, a currency strategist with Commerzbank in Frankfurt. On other exchanges, the Singapore Straits Times Index rose 0.27%; the Thai Set gained 0.70% and is up 17.65% YTD; the Australian ASX 200 traded flat; the Taiwan TWSE rose 0.43%; the S. Korea Kospi slipped 0.11%; and in late trading in Mumbai in Sensex was up 0.14%.
Japan’s Topix stock index has risen more than 9% since the election victory and the yen has weakened nearly 5% amid anticipation of the plan.
The dollar index, which tracks the USA unit against a basket of six major rivals, slipped 0.5 per cent to 96.589, moving away from its overnight high of 97.530.
Japan’s gross domestic product (GDP) expanded much faster than expected in the first quarter, as the economy benefited from an extra leap year day in February.
Similarly, National CPI y/y excluding fresh food for May fell -0.4 percent y/y, against market expectation -0.4 percent, compared to -0.3 percent in April.
Against the broadly weaker U.S. currency, the Australian dollar was up 0.3 per cent at US$0.7518 and sterling nudged up 0.1 per cent to US$1.3239.
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Brent crude, used to price global oils, was up 5 cents to $44.77 after falling 97 cents during the previous session.
