Japanese Election and Forex Trading

Former Prime Shinzo Abe is back on the scene as him and the Liberal Democratic Party returned to power Sunday.

After three years of Prime Minister Noda ruling, and creating controversy with China, the people of Japan are ready to have the LDP back.

How is the affecting Forex Trading?

The USDJPY has hit a 20 month high and the EURJPY also hit 2011 levels.

In April, a new Bank of Japan governor will come into power too for Abe to work with as Shirakawa’s term ends.

A weak Yen is what is projected for the future and as we know, that can be very beneficial to the Japanese economy.

For the Yen it is “the weaker the better”. The reason is because Japan is a major exporting economy. When prices are lower, Japanese goods are more affordable and competitive.

The BOJ is widely expected to increase asset purchase by another 5 to 10 trillion Yen in the near future. Quotes from Abe also make it clear that he is all for more quantitative easing.

I’m thinking bearish on the Yen now, maybe continuing far into the New Year.

Hear is a chart of USDJPY action from today.

USDJPY

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