Forex News: Yen Continues Decline as Abe Sworn in as Japan PM
Only a few hours after the open of Forex markets following the Christmas break, Japan’s Upper House and Lower House each approved Shinzo Abe to take over as prime minister. At 12:30 GMT, Abe will hold a press conference.
As the forex markets opened, the Yen declined further against the US Dollar. USDJPY climbed fifty points and rose above 85.00 for the first time since April of 2011. The high from that April was 85.52, which remains untouched so far in today’s trading and could continue to provide resistance. The USDJPY has remained in overbought territory on the RSI for the past 200 point rally.
The appointment of Abe was obviously expected following the elections from earlier this month, and the further weakening of the Yen could have been an extended reaction to the election of the new prime minister, who is an advocate of further monetary stimulus, or it could have been an early reaction to the news that Abe had appointed former PM Taro Aso as the finance minister and deputy prime minister. Aso will face the challenge of upholding his party’s promise to raise fiscal stimulus without lowering the price of Japan’s bond yields.
PM Abe has advocated a 2% inflation target and said he wants the Bank of Japan to increase stimulus until prices hit that target. In its last meeting, the BoJ raised stimulus by 76 trillion Yen, but said it had yet to decide on a price target. BoJ Governor Shirakawa’s term ends next year, when Abe could replace him with a governor who is more supportive of increasing monetary stimulus.
European markets are closed today and there are no economic releases during the European session. In the US session, the Richmond Fed Manufacturing Index will be released at 15:00 GMT, 8 is expected. The US stock market will also be open today.
Just to reiterate some earlier warnings by DailyFX analysts, liquidity may be low this week and could create a tough trading environment until New Years.
USDJPY Daily: December 26, 2012
--- Written by Benjamin Spier, DailyFX Research
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.