The pair is likely to maintain a softer undertone in the continuation of position-adjustment of sharp devaluation of the yen since November. The dollar has gained nearly 10% to reach the highest since July 2010 of Y88.41 on Jan. 4 amid speculation that the government will push hard the Bank of Japan to take more aggressive monetary action and that it will also hammer out pro-active fiscal policies. The Council on Economic and Fiscal Policy is expected to hold its first meeting Wednesday to discuss details of stimulus measures and Prime Minister Shinzo Abe’s government is likely to approve pump-priming measures on Friday. The dollar may also fall as global stocks fell before the quarterly reporting season starts in the U.S. Alcoa, typically the first company in the Dow to report results, announced its fourth-quarter numbers after the close of trading today. The Standard & Poor’s 500 Index fell for a second straight day on Tuesday, down 0.5%, while yields on Treasury’s 10- year notes fell for a third straight, down three basis points. The rate moved from Y86.90 to Y87.83 on Monday.
EasyForexNews Research Team