Moreover, Taro Aso, Japan’s finance minister, said on Tuesday that the government has yet to make a final decision on the size of a recently-announced fiscal stimulus package.
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“The weakness in the yen. has been driven by a speech from Abe announcing plans for more than 28 trillion yen’s worth of stimulus”, said economist Jeremy Cook at foreign exchange traders WorldFirst.
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.
Japan’s Nikkei stock average rose almost 2 percent on the larger-than-expected stimulus package, while the yen slumped against the dollar.
It will also add pressure on the Bank of Japan to match the measures with monetary stimulus when it concludes its meeting on Friday.
The Federal Reserve also meets this week for a decision on interest rates.
US Treasury yields fell and followed a decline in European government debt, whose yields held in negative territory due to purchases by the European Central Bank.
The Dow Jones industrial average was up 58.41 points, or 0.32 per cent, at 18,532.16, the S&P 500 was up 5.79 points, or 0.27 per cent, at 2,174.97 and the Nasdaq composite was up 33.57 points, or 0.66 per cent, at 5,143.62.
Gold steadied near $1,320 an ounce ahead of the outcome of a two-day Federal Reserve policy meeting, which will be closely watched for any clues on the scale and pace of USA interest rate hikes this year.
Positive U.S. economic data has increased expectations that the Fed could raise rates in December, boosting the relative attraction of the dollar.
JAPAN STIMULUS: Japan is likely to be in focus through Friday when the country’s central bank is expected to deliver a fresh monetary stimulus.
In currency markets, price action was messy, triggered by Australian price data where core inflation stayed at a record trough, though major pairs clung to well worn trading ranges.
While the doubts over the Bank of Japan may undermine that, Bank of England policymaker Martin Weale – last week an opponent of cutting interest rates – said his view had changed on the back of a poor batch of purchasing managers surveys. With expectations for more easing from the BOJ, bond traders in the United States are paying more attention as policies that push Japanese bonds further into negative territory are driving demand for Treasuries.
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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 worldwide oils, fell 47 cents to $44.40 a barrel in London. The contracts had touched $42.36 on Tuesday, their lowest in three months.
