Forex Flash: USD/JPY to extend upside on Abe's inflation target of 2% - Commerzbank

FXstreet.com (Barcelona) - The USDJPY is expected to resume its upside after trading sideways for a few days as Shinzo Abe, leader of the opposition and the candidate favoured to win the election of 16th December, announced that he was going to raise the Bank of Japan's inflation target to a minimum of 2% and intends to force the BoJ to reach this target at any expense.

Last night's Japan CPI data of October, at -0.4% (YoY) means plenty of room for markets to price in. "There is no denying the continued deflation and therefore the fact that they are clashing with Abe's expectations. It is therefore hardly surprising that the yen is once again easing against all other majors", wrote analyst Lutz Karpowitz, expecting Abe to get involved into the details of the BoJ's monetary policy as he will be able to appoint his own candidates to the most important positions in the BoJ.