FX.co ★ Yen Languishes Ahead of Stimulus Announcement

The Japanese yen edged closer to 157.5 per dollar on Thursday, reaching ten-month lows as investors anticipated Prime Minister Sanae Takaichi's substantial stimulus package, expected to exceed 20 trillion yen. This significant spending plan has sparked concerns regarding Japan's fiscal stability, triggering a "Sell Japan" sentiment that has driven the yen and bond prices downward. Despite these challenges, equities have remained stable, bolstered by Nvidia's robust earnings report that alleviated fears of an AI bubble. The yen's sharp depreciation on Wednesday followed remarks by Finance Minister Satsuki Katayama, who stated there was no specific discussion about foreign exchange during her meeting with Bank of Japan Governor Kazuo Ueda. With this context, traders are speculating that authorities might intervene if the yen weakens to around 160 per dollar, in line with previous intervention thresholds. Further pressure on the yen resulted from the strength of the dollar, as several Federal Reserve officials indicated a rate cut in December is unlikely.