Week in FX Asia-What’s it take to weaken that Yen?

A global financial meltdown, a Tsunami or even a nuclear mishap has not been able to weaken Yen significantly. The Yen bears will be pinning their hopes on a strong majority win by the Liberal Democratic Party in this Sunday’s elections.

Currently, investors continue to pare some of their short yen positions ahead of this weekend’s Japanese election. In doing so, they have managed to pull USD/JPY further away from its eight-month high printed earlier.

Will the LDP win a majority? They require a big enough parliamentary win to pressure the BoJ into easing more aggressively. If the results are a slam-dunk for the LDP, the bears will expect the dollar to break through this year’s high with considerable ease (Y84.19).

Spare a thought for the hapless BoJ, they have been easing all year and have put little dent into the Yen’s persistent strength. What can they do that will have a material effect? Buy foreign bonds perhaps, certainly a solution and one that would garner strong resistance from the MoF and the Japanese government. Maybe all it takes is “incompetence” to do the job?

 

WEEK AHEAD

  • GBP Core Consumer Price Index
  • GBP Bank of England Minutes
  • NZD Gross Domestic Product
  • JPY Bank of Japan Rate Decision
  • EUR German Producer Prices
  • USD Gross Domestic Product
  • GBP Gross Domestic Product
  • CAD Gross Domestic Product
  • CAD Consumer Price Index

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Dean Popplewell

Dean Popplewell

Vice-President of Market Analysis at MarketPulse
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

Latest posts by Dean Popplewell (see all)