Waiting for the Fed…
Japanese Prime Minister Shinzo Abe surprisingly revealed yesterday that he intended to put in place a fiscal plan valued at some 28 trillion yen ($265 billion USD) to stimulate the nation’s economy. Most observers expected announcements Friday when the Bank of Japan made its key rate decision public and the ruling Liberal Democratic Party held a general meeting. The yen reacted sharply to the news overnight, losing up to 2.5% against the greenback compared to its high in trading on Tuesday. It remains to be seen whether the BoJ will take further measures on Friday, which could drive the USD/JPY pair upward toward the levels seen this spring.
We will have to wait until 2 p.m. today for the Fed to announce its key rate decision. Although markets do not anticipate a rate increase, generally favourable economic news in recent weeks could allow Fed Chair Janet Yellen to adopt a more optimistic tone, which would probably be perceived as an openness to a rate increase by the end of this year.
