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A snap election could benefit USD/JPY in the medium term – Nomura

FXStreet (Barcelona) - Research Analysts at Nomura see the snap election result to likely to be positive for Japanese equity and USD/JPY in spite of the risk associated with election outcomes.

Key Quotes

“The possible timings of a snap election by year-end are 14, 21, and 28 December. To call a snap election on 14 or 21 December, PM Abe needs to dissolve the diet by 30 November when the current extraordinary diet session is scheduled to end.”

“In addition, at the expense of increased near-term political uncertainty, a snap election could reduce mid-term political uncertainty into 2015-16.“

“While the cabinet‟s approval rating has been declining gradually, support for the small opposition parties has not improved. Thus, the likelihood of a ruling coalition victory at a snap election at this point, if any, looks high to us.”

“As a result, a snap election could increase the possibility of PM Abe securing his position over the next few years. Even though the election outcome always carries risk, a snap election result is more likely to be positive for Japanese equity and USD/JPY.”

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