Sickly yen hits seven-year low in London

The yen skidded to a seven-year low against the dollar on Friday as investors bumped up bets on Japan's Prime Minister Shinzo Abe calling an early election and delaying a hike in sales tax. Better-than-expected euro zone growth numbers were not enough to boost the single currency, which is close to two-year lows and has lost around 10 percent in the last six months against the dollar.
-- Swiss franc edges closer to SNB cap
The yen has taken only a month to notch up a 10 percent drop, hit by a rallying dollar, a reallocation of Japan's government pension fund's away from domestic assets, the expansion of an already huge stimulus programme and now a likely sales tax delay. The dollar hit 116.49 yen on trading platform EBS - its strongest since October 2007 - after reports that Abe had decided to call a snap election and could announce it next week. The euro, too, hit a 10-month high against the yen, rising past 145 yen to 145.05.
"If there's no additional sales tax hike, the impulse to higher inflation starts to fade away quite rapidly," said Alvin Tan, a currency strategist at Societe Generale in London. "So in order to push inflation higher, which is what everybody wants, you need the currency to weaken a lot more." The first increase in the two-stage sales tax hike, which came in April, sent the economy into a slump. Japanese companies overwhelmingly hope Japan's planned tax increase will be postponed or scrapped, a Reuters poll showed on Thursday.
The euro was down 0.2 percent at $1.2448, not far from last week's two-year low of $1.2358, as traders bought the dollar ahead of US retail sales numbers due at 1330 GMT. Data showed the euro zone expanding by 0.2 percent in the third quarter compared with the previous three months, with Germany just managing to avoid a recession. "The overall picture is still of an economy that is growing very weakly," said Lee Hardman, a currency economist at Bank of Tokyo-Mitsubishi UFJ in London, adding the data did not lift pressure on the European Central Bank to further ease monetary policy. The Swiss franc struck a 26-month high against the euro at 1.2015, edging closer to the Swiss National Bank's three-year-old cap of 1.20 francs per euro.