Forex Flash: Payrolls report & US election key for USD/JPY – BTMU
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USD/JPY
FXstreet.com (Barcelona) - USDJPY's advance is gathering momentum and is in sight of the Oct 26th intraday high at 80.38. A breach of this high would bring the June high of 80.62 into focus writes Derek Halpenny, European Head of Global Markets Research at the Bank of Tokyo Mitsubishi UFJ.
He believes that the continued momentum in favour of Yen selling has helped by last night BoJ minutes which disclosed an increase in concerns over recession in Japan amongst board members and a heightening of political pressure for further accommodative measures. The Economic Minister Maehara attended the meeting and pressured the BoJ to work more closely with the government to produce 'visible results' on tackling deflation. Halpenny notes that all of this combined to lead to the joint statement that was released after the following meeting on the 30th October.
Overall however, he feels that there was nothing too revealing in these minutes but given yen selling momentum is at least partially being driven by BoJ policy, market participants have taken encouragement that further political pressure may deliver further easing ahead.
Politically there was good news for Japan as opposition leader Abe made an effort to take steps to end the political deadlock holding up the debt financing bill. Failure to pass the bill would see the Government effectively run out of money by the end of the month and has been billed as the Japanese 'Fiscal Cliff'.
Halpenny notes that "evidence of progress between the DPJ and the LDP would certainly make it easier for the BOJ to take further monetary easing steps ahead. USDJPY is looking stretched in our view and with US yields still flat, risks of a correction back lower are building."
He believes that the continued momentum in favour of Yen selling has helped by last night BoJ minutes which disclosed an increase in concerns over recession in Japan amongst board members and a heightening of political pressure for further accommodative measures. The Economic Minister Maehara attended the meeting and pressured the BoJ to work more closely with the government to produce 'visible results' on tackling deflation. Halpenny notes that all of this combined to lead to the joint statement that was released after the following meeting on the 30th October.
Overall however, he feels that there was nothing too revealing in these minutes but given yen selling momentum is at least partially being driven by BoJ policy, market participants have taken encouragement that further political pressure may deliver further easing ahead.
Politically there was good news for Japan as opposition leader Abe made an effort to take steps to end the political deadlock holding up the debt financing bill. Failure to pass the bill would see the Government effectively run out of money by the end of the month and has been billed as the Japanese 'Fiscal Cliff'.
Halpenny notes that "evidence of progress between the DPJ and the LDP would certainly make it easier for the BOJ to take further monetary easing steps ahead. USDJPY is looking stretched in our view and with US yields still flat, risks of a correction back lower are building."
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