The Japanese yen is falling after Prime Minister Shinzo Abe ordered a new round of fiscal stimulus spending.
The currency is weaker by 1.9% at 102.46 per dollar as of 7:23 a.m. ET.
Abe’s Liberal Democratic Party scored a big win in Upper House elections held over the weekend. The election was said to be a referendum on Abe’s economic stimulus plan dubbed “Abenomics,” which uses the “three arrows” of fiscal stimulus, monetary easing and structural reforms.
“Many observers are emphasising that the weekend election in Japan has given a super-majority to those parties that want to change the constitution, relaxing the restraints on the military,” wrote Marc Chandler, the global head of currency at Brown Brothers Harriman.
“We suspect it is not so easy, as the LDP’s coalition party is not nearly as sympathetic. Moreover, it is clear that Abenomics has still not won the hearts and minds of the Japanese people.”
In other Japan news, Bank of Japan Governor Haruhiko Kuroda met with former Fed Chair Ben Bernanke earlier today over lunch.
As for the rest of the world, here’s the scoreboard:
- The British pound is surging after Conservative party leadership candidate Andrea Leadsom pulled out of the race to be the UK’s prime minister, leaving the favourite, Theresa May, with a clear path to becoming the country’s next leader. The pound is stronger by 0.5% at 1.3013 against the dollar.
- The US dollar index is stronger by 0.3% at 96.55 after hitting a four-month high of 96.79 in early trade. US economic data is absent on Monday. It will pick back up on Tuesday with the release of JOLTS Job Openings.
- The Bank of Canada meets on Wednesday and the Bank of England meets on Thursday. A Morgan Stanley team led by Hans W. Redeker noted that they expect the BoE to cut rates by 25 basis points, “which should keep GBP offered and risk bid.”