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Japan Announces Economic Stimulus on Tuesday, Yen Weak

The Japanese yen was one of the weakest currencies today due to markets being in a risk-on mode, meaning that there was limited demand for safer currencies. The yen fell against almost all of its rivals, though managed to stay flat against the US…

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The Japanese yen was one of the weakest currencies today due to markets being in a risk-on mode, meaning that there was limited demand for safer currencies. The yen fell against almost all of its rivals, though managed to stay flat against the US dollar. Additionally, EUR/JPY has retreated to trade close to the opening level at the time of writing after rallying earlier.

Yesterday, Japanese Prime Minister Yoshihide Suga announced a fresh economic stimulus package worth ¥73.6 trillion ($708 billion). The new package followed two previous packages worth a combined $2.2 trillion introduced earlier this year. Suga explained the decision to add even more stimulus measures:

 

We have compiled these measures to maintain employment, sustain business and restore the economy and open a way to achieve new growth in green and digital areas, so as to protect people’s lives and livelihoods.

report released on Tuesday showed that the Japanese economy has emerged from recession last quarter. Gross domestic product rose by 5.3% in the third quarter of 2020 according to the final estimate, while economists were expecting it to remain unchanged from the reading of 5.0% shown in the preliminary estimate. The growth followed three consecutive quarters of contraction.

As for today’s data, Japan’s Cabinet Office reported that core machinery orders climbed by 17.1% in October after falling by 4.4% in September. Experts had predicted a much smaller increase of 2.6%.

USD/JPY was little changed at 101.15 as of 13:55 GMT today. EUR/JPY was up from 126.05 to 126.18 but has pulled back from the day’s high of 126.52. GBP/JPY gained from 139.10 to 140.17.


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