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Forex pairs in this Article » USD/JPY (Barcelona) - The favorite candidate for the win on Dec-16 election in Japan, LDP's Shinzo Abe, spoke again and replied to yesterday's remarks of BoJ's Shirakawa and explained that he didn't say he was in favor of the BoJ underwriting bonds from the government directly, but buying bonds from the market. He also corrected the "3% inflation" remark to 2 to 3 pct.

Abe wants to increase military spending included in a large scale extra budget and change the Constitution to assert the right of self defense as Japan and China are disputing islands. The primary balance would become a surplus in 2020, according to the party's calculations. The welfare payment would be cut by 10% and corporate tax rates would also ease.

Despite the risk aversion on the Eurogroup taking the USDJPY down to 81.71, the pair was able to strengthen and rally above the 82.00 psychological level, coming to as high as 82.11 for now. "Currently we note the 13 count on the 60 minute chart and the TD perfection set up on the 240 minute chart - both of which imply a minor set back ahead of further gains currently", wrote analyst Axel Rudolph, pointing to an eventual extension to the 2011-2012 resistance line at 83.20.
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