Asian markets soared higher on Tuesday, following the lead from Wall Street with the Nikkei extending its rally as stimulus comments made by Japanese Prime Minister Shinzo Abe late on Monday helped to weaken the yen. S&P 500 closed at an all-time high while the Nasdaq finished at 2016 high.
The Nikkei 225 closed 2.46 percent higher above 16'000 mark. USD/JPY rose to a one-week high on Tuesday by 103.62, after a weekend election victory by Japan's ruling coalition fanned expectations of more economic stimulus and bolstered risk sentiment. Gains in equity markets bolstered yen selling, after it had surged recently on safe haven demand after Britain's vote to leave the European Union added to worries over global growth.
As the yen slipped broadly, EUR/JPY rose more than 1 percent to above 115. EUR/USD was also higher to 1.1126, more than half a percentage point.
Market participants believe the dollar could add to its gains if upcoming US economic data and comments from Federal Reserve officials appear to favour a Fed interest rate rise in September, a view that has lately lost support. Despite stronger US jobs data on Friday, US interest rate futures suggest that many market participants doubt that the Fed will hike interest rates this year, in the wake of Britain's shock vote last month to leave the European Union.
Cable rose more than 1 percent to 1.3156, pulling away from a 31-year low of 1.2798 struck last week. The gains in the pound came as Interior Minister Theresa May was set to become Britain's prime minister on Wednesday with the task of steering its withdrawal from the European Union, after her rival withdrew from the contest.
