Japanese Election Expectations - Yen Weaker Versus Currency Counterparts
The Japanese yen (JPY) was broadly weaker on Thursday 16th November, dropping to a fresh six-month low versus the greenback, after the Japanese PM, Yoshihiko Noda, advised he may be ready to hold a snap election if the primary opposition party agreed to certain electoral reforms. The JPY, which has until recently seen relative strength as a so called "safe haven" currency, dropped to a daily low of 80.83 versus the US dollar.
Shinzo Abe, of the opposing LDP (Liberal Democratic Party) has asked for aggressive easing measures from the BoJ (Bank Of Japan); saying the Central bank needs to print "unlimited yen" in order to combat ongoing deflationary pressures. The market has started to price in this dovish rhetoric, as this kind of move could potentially see the Japanese yen experience prolonged weakness; market participants are positioning themselves accordingly.
NHK has reported that Japan's PM, Yoshihiko Noda is going to dissolve the Lower House of the Diet today (Friday 16th November). This would be Japan's first Lower House election since August 2009.
Yen experienced a drop of 2.18% versus the US dollar (USD/JPY) on Thursday and a 2.73% daily basis decline versus the euro (EUR/JPY), on the back of the aforementioned political developments. EUR/JPY rallied despite confirmation that the eurozone had fallen back into a recession during the third quarter of this year.