The yen fell to its lowest level in 2 1/2 years against the dollar and euro on prospects Prime Minister Shinzo Abe is nearing selection of a new Bank of Japan governor who is likely to add stimulus to spur inflation higher.
Japan’s currency weakened versus most of its 16 major counterparts as data today showed an increase in the jobless rate and a decline in household spending, adding to impetus for further monetary easing to boost growth. Australia’s dollar fell after a government report said manufacturing in China, the nation’s biggest trading partner, expanded at a slower-than- expected pace.
“All the data prints we’ve been seeing from Japan continue to show signs of weakness, suggesting a lot needs to be done to drive this economy out of deflation,” said Stan Shamu, a markets strategist with IG Markets Ltd. in Melbourne. “With the BOJ placing a 2 percent inflation target, they need to bring in someone who’s very aggressive, so every time dollar-yen dips it’s finding buyers.”
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