Yen Slips, Japanese Moves Assessed

The Japanese Yen slipped lower in Asian trading following a report that the Japanese Prime Minister might be considered a tax cut for corporations as a means to offset a two-staged tax hike which is being perceived as a possible drag on the Japanese economy. According to media reports, Shinzo Abe is considering that option as one way to ease Japan’s perennial deflationary trend and, if enacted, it could ultimately provide some support to the USD/JPY pair simply as an offshoot of the boost it would give to Japanese equities. Market players, however, believe that the eventuality will be short-lived since there has been no definitive word yet from the Bank of Japan and because recent economic data has been somewhat tepid.

The U.S. Dollar Index edged off the recently struck 7-week trough of 80.868 .DXY to trade at 81.502 .DXY; the Index is used by investors to assess the greenback’s strength against its major peers. The USD/JPY pair traded at 97.23 Yen, a gain of 0.3% and moving away from 95.81 Yen, which was last week’s 7-week low. Ahead of the release of July’s retail sales data from the U.S., the EUR/USD pair was trading higher at $1.3311, a 0.3% gain.