LONDON (Reuters) – The dollar fell against the yen on Thursday as expectations faded the Bank of Japan, delivering radical stimulus package that some expected this week, and after the US Federal Reserve He was about to mark a rise in short-term rates.
Prime Minister of Japan unveiled a surprising stimulus package 28 trillion yen ($ 265 million) on Wednesday, putting pressure on the central bank to match the aggressive monetary easing and speculation fueling that policies do not conventional as “helicopter money” – give cash directly to businesses and consumers – could be on the cards.
However, sources told Reuters on Thursday that the government is planning to direct fiscal spending 7 trillion yen to help finance the stimulus package that in just a quarter of the total package could disappoint some market players reinforcement for larger expenses given the headline figure.
The dollar fell as much as 0.9 percent to 104.48 yen.
“People thought that the higher the fiscal stimulus package, the greater the likelihood that the government would have to coordinate with the Bank of Japan and would increase the likelihood that some form of message type of money by helicopter tomorrow” said Bank of Tokyo-Mitsubishi UFJ currency economist Lee Hardman, London.
“But the reality is that the Bank of Japan will not make that kind of announcement … The market was too optimistic to expect the most aggressive easing in Japan, and those expectations are being cut back.”
Strategists say the yen could be in a volatile session on Friday, and the dollar could minimum of 2 1/2 years of 99 yen following the vote on Britain to leave the European Union even try.
“Investors will be watching closely not only the statement, but press conference (BOJ Governor Haruhiko) Kuroda after the end of the meeting for clues to future policy,” said Kumiko Ishikawa, senior analyst Gaitame.Com FX Research Institute in Tokyo.
A survey of Citi customers and financial institutions earlier this month showed that 80 percent expect the dollar to fall more than 3 percent against the yen, if the Bank of Japan on Friday plant and does not indicate action in September. More than 30 percent think that the fall would be more than 4 percent.
The Fed, meanwhile, said Wednesday after its two-day meeting that was less concerned about possible disturbances of the US economy, suggesting that a rise in September and was not out of the question, however , it is not clear that signaling.
The dollar index, which tracks the US unit against a basket of six major rivals, it fell 0.7 percent to a two-week low of 96,343 (US dollar index DXY
96.60 to 0.46 (-0.47%)
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5 ‘Strong Buy
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). That put him on track for its biggest daily drop in eight weeks.