Greenback surges on Fed rate hike bets
On Monday, the evergreen buck managed to hit its one-month peak against the Japanese counterpart, while standing still against other peers right after comments by Janet Yellen, the Fed Chair, enhanced the prospects of an upcoming American interest rate lift.
Besides the latest hawkish statement from the Fed, political developments in Japan were also seen backing up the greenback against Japan’s currency.
Shinzo Abe, Japanese Prime Minister told he would about to delay a sales tax lift planned for next April by about two and half years.
Japan’s currently working out a supplementary budget in order to boost its struggling economy, a move widely expected to be followed by the BOJ’s further monetary easing.
The greenback surged above 111.00 yen. That’s the first soar since late April. The dollar hit 111.03 yen at one point.
In general, fiscal policy is quite positive for the Japanese yen. However, if the stimulus goes along with further monetary easing, it’s considered to be a yen-weakening factor because it generates the concept of helicopter money.