USD/JPY to 98.90 on Tax Cut Speculation

The yen snapped a four-day gain versus the dollar as Japanese stocks pared declines amid speculation the government will study a reduction in the nation’s corporate tax rate.

The yen dropped against all its 16 major peers after Kyodo News reported, without citing anyone, that Japan’s government plans to pledge to “promptly” start a study on cutting the effective corporate tax rate. The U.S. currency strengthened before a report forecast to show the world’s largest economy expanded at a quicker pace than initially estimated in the second quarter.

“The yen’s correlation to the Japanese equity market is increasing and it’s being sold on the risk-on trade as domestic stocks rebound,” said Marito Ueda, the senior managing director at FX Prime Corp., a currency-margin company in Tokyo.


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