Japanese yen is heading lower today, thanks in large part to expectations for future stimulus. Risk appetite is on the rise today and that is having its impact on low beta currencies like the yen. However, the yen also has the added pressure related to the expectation that Shinzo Abe will be able to continue his stimulus measures.
Over this past weekend, the upper legislative house in Japan held an election and Prime Minister Shinzo Abe’s party won a supermajority. This is being interpreted as a mandate to continue with stimulus measures. As a result, Abe says he is getting ready to prepare another package designed to aid in growth.
More stimulus likely means more measures that will weaken the Japanese yen in currency trading on the FX market. In addition to risk appetite reducing demand for safe haven right now, the fact that stimulus is likely coming to Japan is putting even more downward on the yen.
Japanese policymakers prefer a weaker yen anyway, since it offers advantages in trade.
At 11:41 GMT, USD/JPY is moving higher, heading up to 103.62 from the open at 102.79. EUR/JPY is also heading higher, gaining to 115.20 from the open at 113.67. GBP/JPY is up to 136.91 from the open at 133.62.
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