By Sara Sjolin, MarketWatch
LONDON (MarketWatch) — The Japanese yen continued to weaken in Friday’s trade ahead of the country’s general election over the weekend, while the dollar slipped against most other major currencies after rising the prior day.
The ICE dollar index DXY +0.02% , which measures the greenback against a basket of six rival currencies, fell to 79.88 from 79.925 in late North America trade on Thursday.
The dollar, however, continued to strengthen against the Japanese yen, on expectations Japan’s Liberal Democratic Party leader Shinzo Abe will win in Sunday’s election, which could raise calls for aggressive monetary easing and higher inflation. The dollar USDJPY +0.0848% traded at ¥83.70 from ¥83.65 the prior day, the highest level since March. See: Japan’s election hinges on undecided voters
“Abe has promised to boost nominal economic growth to 3% with the help of government stimulus programs and expansionary monetary policy,” analysts at Commerzbank said in a note.
“Should he really implement the announced measures, significant yen depreciation would be the result. The currency has been under considerable pressure for some weeks, consistently remaining above the USD/JPY mark of 82. The options market is also clearly betting on a weaker yen,” they said.
Among other notable currency pairs, the euro climbed to trade at $1.3093 from $1.3077 in late trade on Thursday. Most European equity markets were also on the rise, the Stoxx 600 Europe index XX:SXXP -0.02% gaining 0.1%, after the purchasing managers’ composite output index for the euro zone showed the economic downturn eased in December. See: Euro-zone downturn eases in December: PMI data
U.S. stock futures also pointed to a higher open on Wall Street. See: Stock futures up ahead of CPI; China data inspires
The pound rebounded against the dollar GBPUSD +0.0134% to trade at $1.6121 from $1.6112 the previous day, when Standard & Poor’s Ratings Services cut its outlook on the U.K.’s triple-A credit rating to negative from stable. See: S&P cuts outlook on U.K. AAA rating to negative
The Australian dollar AUDUSD -0.0467% inched higher to $1.0528 from $1.0527.
Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.
