The yen weakened across the board on Monday, opening with a negative gap of more than 1% versus most majors before recovering its losses.
The weakness in the yen was followed by the victory of Shinzo Abe of the Liberal Democratic Party, who will be sworn in as the next prime minister of Japan for a second term. His first stint as prime minister lasted only for a year. The newly sworn prime minister has promised to increase Government spending to bring the economy out of deflation.
The Bank of Japan is due to announce its policy decision on the 20th of this month and analysts are expecting the Central Bank to increase monetary stimulus amid pressure from the newly- elected prime minister.
Against the US dollar, the yen opened at 84.35, down 1.05%, compared with the previous day’s close of 83.47, before scaling down its losses to close at 83.88, a 0.49% decline.
The yen settled lower versus the EURO, at 110.41, down 0.48%, after recording an intra – day high of 111.30. The currency pair is currently trading at a nine- month low. The yen was also lower against the pound sterling and ended the session at 135.84, a 0.7% decline and the sixth in succession.
The euro on the other hand rallied to its sixth consecutive winning session versus the US dollar, settling at 1.3163, a flat close day- on-day, but not before extending its gains to a new seven and a half month high. Versus the sterling, the euro closed slightly in the negative at 0.8123, a loss of 0.2%, day-on day.
The Canadian dollar rose versus the US dollar after attempting and failing to break the 0.9900 mark, finally settling at 0.9833. The CAD has gained almost 2.2% from the lows of 1.0056 since the mid of November
The Australian dollar too was strong versus the USD. The currency pair had rallied to a three- month high of 1.0568 before settling flat for the day, at 1.0551.
The Swiss franc also continued its gains and closed at 0.9175, a seven and a half month high versus the USD.
All in all, the US dollar along with the Japanese yen remained weak versus most of the majors.
Fundamental data from the Americas
The TICS data, which is an indication of foreign investments in US financial instruments rose less-than-expected in October, according to official data. In a report, the U.S. Department of the Treasury said that net foreign purchases of long-term securities totalled USD1.3 billion in October, compared to USD3.2 billion in September.
The empire state manufacturing index, which measures the manufacturing conditions declined to -8.1% in December from -5.2 in November, declining for the fifth successive month
The Australia’s Reserve Bank released minutes from its previous policy meeting which revealed policymakers are expecting the Australian job market to remain weak.