The yen plunged on a report that Japanese Prime Minister Shinzo Abe will announce details of a ¥27 trillion (£200 billion) stimulus package Wednesday.
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The Bank of Japan policy review follows one from the Federal Reserve, which said near-term risks to the USA economic outlook had diminished and the labour market had improved, suggesting it will raise rates later this year.
MSCI’s broadest index of Asia-Pacific shares outside Japan.MIAPJ0000PUS edged up 0.1 percent, having previously climbed to its highest level since August 11, 2015.
Spreadbetters forecast a slightly lower open for Britain’s FTSE, Germany’s DAX and France’s CAC.
USA stock futures are pushing higher and the NASDAQ is doing particularly well, likely prodded by Apple’s fortunes.
“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.
Expectations that the BOJ will adopt fresh stimulus after its two-day policy meeting starting on Thursday have helped to bring down the two-year yield to a record low of minus 0.370 percent. These include cutting interest rates further into negative territory, more bond-buying or expanding its stimulus program to include other assets such as exchange-traded funds, according to the Nikkei. But the central bank’s improved mood wasn’t enough to cement expectations that it was gearing up to raise interest rates anytime soon.
Promises of support from governments and central banks around the world since the Brexit vote last month have provided the foundation for recent big gains across equities markets.
The Fed’s latest policy statement spurred traders to favour longer-dated US Treasuries over shorter-dated issues, pushing the yields on 10-year notes US10YT=RR and 30-year bonds US30YT=RR to 1-1/2-week lows as prices rose.
On currency markets, the dollar jumped as high as 106.54 yen from around 105.01 yen in the morning, after Fuji Television flagged the stimulus on Wednesday afternoon.
Gold XAU= held steady at $1,319 an ounce.
The euro, which gained 0.7 percent overnight, edged up to a nine-day high of $1.1074 EUR=.
Against the broadly weaker U.S. currency, the Australian dollar was up 0.4 per cent at $0.7524.
OIL: Benchmark U.S. crude dropped 22 cents to $42.70 per barrel on the New York Mercantile Exchange while Brent crude, used to price global oils, fell 47 cents to $44.40 a barrel in London.
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Brent crude, used to price worldwide oils, was up 5 cents to $44.77 after falling 97 cents during the previous session.
