The Yen is under political pressure. Overview for 23.10.2017

23.10.2017

The USD/JPY pair is trading close to its four months’ high after Shinzō Abe’s party won the elections.

The Japanese Yen is starting the new week not very well. The current quote for the USD/JPTY pair is 113.76. In the morning, the instrument was trading above 114.00, which is the highest level since July.

Well, it’s all about political news. The Liberal Democratic Party led by the current Japanese Prime Minster, Shinzō Abe, secured a resounding victory during the early parliamentary elections that took place last weekend. However, it’s not a surprise really: Abe seems to be the only person, who can deal with the ultra‑soft monetary policy that is conducted by the Japanese government along with the Bank of Japan.

So, “Abenomics” will continue. Everything will remain the same: the QE program, the soft monetary approach, low rates, and maybe the revision of the country’s Constitution, which is rather pacifistic. The latter is pretty questionable, but shouldn’t be disregarded.

Abe himself has already officially commented on his party’s winning the elections. The results turned out to be better than he expected, and in the nearest future, a new Cabinet will be formed. Changes to the constitution, if necessary, will be made by means of referendums. Right now, Abe is sounding very careful, but it’s quite clear that in the nearest future the Japanese government will have to consider all changes that have to be made.

 

RoboForex Analytical Department

 

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