USD/JPY Back up to 118.20

The yen fell for the first time in four days on speculation Prime Minister Shinzo Abe’s Liberal Democratic Party will win an election this weekend and extend measures that have weakened the currency.

The yen dropped versus all of its 16 major peers amid concern the Bank of Japan will need to maintain stimulus to help the economy emerge from a recession. Australia’s dollar rose for a second day after a government report showed employers added more jobs than economists forecast. New Zealand’s currency advanced as the central bank said future interest-rate increases can be expected. A gauge of global foreign-exchange volatility increased for a fourth day.

“If the election turns out as the market expects, which is a significant win by the LDP, that will lead to Abenomics being carried out even more and that is something that can weaken the yen further,” said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo. “We’ve seen dollar-yen dropping to 117 from 121, so it’s only natural to see some rebound, but the upside will eventually be limited.”

Bloomberg

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