Forex Flash: A shift in tone lifts the dollar and yen – BTMU
Forex pairs in this Article »
USD/JPY
FXstreet.com (Barcelona) - USD and JPY are generally higher against Asian currencies this morning after a shift from improving risk sentiment writes Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ.
He sees one of the triggers as being downbeat comments from Senate Majority Leader Harry Reid who expressed disappointment in the lack of progress in discussions over eliminating or cutting down on the fiscal cliff. However, Halpenny highlights that he still suspects that a deal will be done but it may well drag out to the edge of the cliff. However, the turnaround in confidence was enough to push the Topix index lower by 1.3%, reinforced by the rebound of the Yen.
Looking to USDJPY, Halpenny notes that it has closed lower in four out of the last five days and the Abe influence on Yen looks to be starting to wane. He notes that a former economic advisor to Abe during his first stint as PM in 2006-7 has stated that the BoJ should be forced to adopt BoE inflation targeting and be held accountable to achieving these levels. On a side note, Halpenny cheekily asks, "Is the BoE held accountable?"
Back on song, he notes though that what is clear is that change in the way that the BoJ conducts monetary policy won't happen overnight so there is, in his view, plenty of scope for the 'Abe trade'of selling to reversal.
Elsewhere, formal campaigning for the election begins on 4th December and he suspects that Abe's rhetoric on BoJ policy that has served to undermine the Yen will not has the same impact as the law of diminishing returns sets in.Halpenny notes that separately, a maverick from the Koizumi era, Heizo Takenaka, ruled out seeking the job of BoJ Governor. If speculation on him taking the job had escalated that would have helped undermine the Yen, but that now looks unlikely.
He sees one of the triggers as being downbeat comments from Senate Majority Leader Harry Reid who expressed disappointment in the lack of progress in discussions over eliminating or cutting down on the fiscal cliff. However, Halpenny highlights that he still suspects that a deal will be done but it may well drag out to the edge of the cliff. However, the turnaround in confidence was enough to push the Topix index lower by 1.3%, reinforced by the rebound of the Yen.
Looking to USDJPY, Halpenny notes that it has closed lower in four out of the last five days and the Abe influence on Yen looks to be starting to wane. He notes that a former economic advisor to Abe during his first stint as PM in 2006-7 has stated that the BoJ should be forced to adopt BoE inflation targeting and be held accountable to achieving these levels. On a side note, Halpenny cheekily asks, "Is the BoE held accountable?"
Back on song, he notes though that what is clear is that change in the way that the BoJ conducts monetary policy won't happen overnight so there is, in his view, plenty of scope for the 'Abe trade'of selling to reversal.
Elsewhere, formal campaigning for the election begins on 4th December and he suspects that Abe's rhetoric on BoJ policy that has served to undermine the Yen will not has the same impact as the law of diminishing returns sets in.Halpenny notes that separately, a maverick from the Koizumi era, Heizo Takenaka, ruled out seeking the job of BoJ Governor. If speculation on him taking the job had escalated that would have helped undermine the Yen, but that now looks unlikely.
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