Japanese Yen Weakness As PM Noda Suggests Early Election Possible
(Forex-FX-4X.com 14th November, 2012)
The Japanese yen has dropped versus its major currency counterparts today after Japanese Prime Minister Yoshihiko Noda advised he could be open to dissolving parliaments lower house, as soon as this week (November 16th), with a view to holding elections in mid-December. The yen has dropped broadly because a government run by the opposing Liberal Democratic Party (LDP), would see a government in power who have previously criticised the BoJ (Bank Of Japan) for not tackling the yen strength scenario. Market participants are concerned that fiscal belt-tightening may not be as high up the agenda for Shinzo Abe and his Liberal Democratic Party as it is with the current regime.
Essentially, the potential is there for additional monetary easing measures if Shinzo Abe takes the helm from PM Noda and the market looks to be pricing in this risk. A recent poll shows that Japan’s ruling Democratic party are distinctly out of favour, as support for PM Yoshihiko Noda’s government, from the Japanese public, is at the lowest level found since he took office last year.
USD/JPY Technical Overview – 14th November
- USD/JPY (see daily dollar/yen chart below) is currently testing offers around the 80.00 handle (79.98 intra-day high) and is trading up +0.61% on the daily basis.
- Significant resistance has been seen around the 80.60 since price broke lower in April this year. This is a key level, with the 50% retrace of 84.17 > 77.12 closely aligned and will be a technical focus if the 80.00 handle is taken by the dollar/yen bulls. See our recent USDJPY analysis for further reference.
Japanese Yen Lower After PM Noda Suggests Early Election Possible