The Japanese held large gains against its major rivals on Thursday as it rallied on risk aversion and disappointment over lack of clear policy guidance from Tokyo following a decision to delay a consumption tax hike. USD/JPY slipped to 108.74, from standing above 110 only on Wednesday morning. A steep drop in Tokyo stocks fueled demand for the safe-haven currency.
The dollar, which had soared to a one-month high of 111.455 against the yen on Monday on expectations for an early US rate hike, also took a big knock after Japanese Prime Minister Shinzo Abe announced on Wednesday that he was delaying a sales tax hike by two and a half years.
Oil prices stood firm on Thursday despite mixed market signals ahead of an OPEC meeting in Vienna, which many market participants believe will not result in any output restrictions.
International Brent crude oil futures were trading at $49.75 per barrel before the start of the European session, up 3 cents from their last settlement, while US West WTI crude was hovering around $49 a barrel.
Japan's Nikkei plummeted to close 2.32 percent lower after the government moved to delay a sales-tax hike for more than two years, weighing on mostly higher markets around the region. EUR/JPY dropped below 122, and AUD/JPY tumbled more than 0.7 percent to 78.60.
Meanwhile, worries over Great Britain leaving the European Union continued to weigh on the pound. Cable has dropped over 2 percent in just two days after a recent polls showed the 'Out' camp holding a slight lead.
Forex traders will wait for a series of economic data starting from the ADP private employment report and ECB policy meeting today, to the key jobs data report from the US tomorrow. EUR/USD rose above 1.12 as traders booked their profits following the steep drop in the pair in the last weeks.
