The yen continues to tumble, hitting a one-week low versus the dollar on Tuesday as gains in equity markets helped spur selling of the yen which had risen recently on safe haven demand after Britain's vote to leave the European Union added to worries over global growth.
The weekend election victory by Japanese Prime Minister Shinzo Abe’s ruling coalition fueled expectations of more economic stimulus and bolstered risk sentiment in the country.
The dollar rose 0.3 percent to 103.05 yen and touched a high of 103.29 yen at one point, its strongest level since July 1 while the euro gained 0.5 percent to 114.17 yen. Against the dollar, the euro rose 0.2 percent to $1.1083.
Prime Minister Shinzo Abe said he planned extra fiscal stimulus following his party's victory in the Upper House election and numbers hover around 10-20 trillion yen for the proposed package.
According to Shinsuke Sato, head of FX trading group for Sumitomo Mitsui Banking Corporation, "In dollar/yen, there had been an excessive build-up of yen-buying positions and such bets are getting squeezed."
Sato sees the probability of some market players selling into the dollar's rally against the yen but believes that the dollar could increase its gains if upcoming U.S. economic data and comments from Federal Reserve officials appear to favor a Fed interest rate rise in September.
Sterling Up, Oil Down
Sterling rose 0.6 percent to $1.3078, moving away from a 31-year low of $1.2798 struck last week. Oil prices fell more than 1 percent on Monday, hitting two-month lows on increased selling after the market hit below a key technical support level last week on concerns of oversupplies.