Forex Flash: The yen's movement eclipsed the euros vagaries this week. - BBH

FXstreet.com (Barcelona) - The analysts at Brown Brothers Harriman have noted that there have been weeks (5 session periods) in the past six months in which the dollar rallied a little more that 2 Yen.

However, this time they think it feels a little different. They highlight that in their work they tend to emphasis two drivers of the Yen, the general investment climate (risk on/off) and interest differentials. However, different circumstances this time is partly a reason why they did not initially call for a break out.

US equities, the proxy for risk-on, continue to do poorly and there has been no increase in the US premium over Japan. They note that this is an unusual set of circumstances as the Yen is being driven by internal considerations. In particular the market assumes that next month's election will see a LDP return to power, possibly leading a coalition with Hashimoto's Restoration Party.

This means that Japan's 7th PM in as many years will be Abe who wants a dramatically more aggressive monetary policy and the sudden move was the markets discounting this prospect to drive Yen to six month lows against the dollar.