The U.S. Dollar edged higher versus the Japanese Yen, striking a fresh 7-year peak, after Shinzo Abe, the Japanese Prime Minister was rumored to be considering a delay to an upcoming tax increase. Insiders say that the Prime Minister recognizes that the economy is too fragile to withstand yet another sales tax and is thus likely to postpone it, especially given that there might be a change in political parties as a result of an upcoming snap election.
That news, and a general increase in investors’ risk appetite, helped send the Yen lower. As reported at 9:18 a.m. (GMT) in London, the USD/JPY pair was up 0.9% on the EBS trading platform, trading at 116.02 Japanese Yen, a level not seen since late 2007; last Friday, after a disappointing non-farms report from the U.S., the greenback had fallen to 113.86 Japanese Yen. The EUR/UD was also lower, losing 0.1% to trade at $1.2409, but moving away from last week’s 2-year low when the pair hit $1.2358.
Japan’s Easing Plans Pile on Pressure
Also putting pressure on the Japanese currency was the Bank of Japan’s recent announcement that it would be expanding its balance sheet with further easing which would hopefully provide some stimulus to the lackluster Japanese economy.