The yen weakened against all of its major peers on speculation the Bank of Japan (8301) will boost monetary easing to counter the nation’s drop into an economic recession.
Japan’s currency retreated versus the dollar before data which may confirm the economy shrank, adding momentum to stimulus calls from the front-runner to become the next prime minister at elections this month. The euro remained lower against the greenback after posting the biggest drop in a month before a report forecast to show German industrial production stagnated. The European Central Bank yesterday reduced growth forecasts, leaving the door open to interest-rate cuts.
“There is further potential upside for dollar-yen, particularly with the election getting close and with all the talk about wanting the BOJ to be a lot more proactive,” said Khoon Goh, a senior currency strategist in Singapore at Australia & New Zealand Banking Group Ltd. (ANZ)