US dollar extends gains against yen on Japanese stimulus expectations

The US dollar climbed further against the Japanese yen on Tuesday as an election victory by Japan's ruling coalition spurred market expectations for more fiscal stimulus.

On Sunday, Japan's ruling coalition won a landslide victory in upper house elections. Analysts said that this makes it likelier that Japanese Prime Minister Shinzo Abe will push through further monetary easing measures as he promised earlier this month.

The yen dipped 2 per cent against the greenback to its lowest level in two weeks in late trading on Tuesday. In the previous session, the yen lost 2.24 per cent against the greenback, the biggest one-day decrease since April, Xinhua reported.

Moreover, investors were still digesting the newly-released nonfarm payroll report. Total nonfarm payroll employment increased by 287,000 in June, beating market consensus of a 175,000- gain, and the unemployment rate rose to 4.9 per cent, the Labour Department reported on Friday.

Analysts pointed out that although the Federal Reserve will take encouragement from this vital data, they simply aren't in a position to consider a rate hike at the moment.

The dollar index, which tracks the greenback against six major peers, was down 0.10 per cent at 96.479 in late trading.

In late New York trading, the euro rose to $1.1068 from $1.1058 of the previous session, and the British pound added to $1.3261 from $1.2997. The Australian dollar went up to $0.7639 from $0.7534.

The dollar bought 104.88 Japanese yen, higher than 102.79 yen of the previous session. The dollar climbed to 0.9877 Swiss francs from 0.9825 Swiss francs, and it slipped to 1.3012 Canadian dollars from 1.3120 Canadian dollars.

--IANS

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