Forex- USD/JPY rallies, but pares gains in Asian trade
Published Dec 16, 2012 10:38PM ET
In Asian trading Monday, USD/JPY jumped 0.6% to 84.05, but that is well off the high of the session of 84.31, also the opening print. USD/JPY traded as low 83.86.
The pair was likely to find support at 82.31, Tuesday’s low, and resistance at 84.34, today’s high.
In political news, Shinzo Abe ran to victory to become Japan’s next prime minister. In his second go around as Japan’s top elected official, Abe becomes the country’s seventh leader in six years. Abe’s Liberal Democratic Party took 294 of 480 seats in Japan’s lower house of parliament spurring hopes that Abe will have a mandate to force the Bank of Japan to engage in monetary easing in order to weaken the yen.
Elections for Japan’s upper house of parliament are still seven months away, which puts pressure on Abe to weaken the yen immediately. Abe resigned as Japan’s prime minister in 2007, citing health concerns. He inherits an economy that is the world’s third-largest, but one that has grappling with the effects of another recession and persistently rising yen.
Japan’s GDP results contracted in the second and third quarters. Economists view two consecutive quarters of GDP contractions as meaning a country is in a recession.
Elsewhere, EUR/JPY surge 0.56% to 110.53 while GBP/JPY added 0.51% to 135.79. CHF/JPY gained 0.41% to 91.38.
The Australian and New Zealand dollars continued to climb to multi-month highs against the yen as AUD/JPY added 0.31% to 88.53. NZD/JPY rose 0.33% to 70.92.
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Written By: Investing.com
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