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USD/JPY Volatile on Abe Spec – TD Securities

FXStreet (Barcelona) - Analysts at TD Securities note that the JPY is likely to remain in focus for the markets following reports suggesting that PM Abe’s government is mulling a snap election in December, and see USD/JPY slipping below to 115.00/10 to find a firmer support at 114.00/10.

Key Quotes

“The swing factor in this respect may be next Monday’s Q3 GDP report (released late Sunday ET); a weak rebound in growth after the sharp Q2 decline (-7.1% q/q, ann.) will shift the balance of expectations against the government pushing on with the sales tax increase—and in favour of a snap election therefore.“

“Reports suggest that the government will be concerned if growth fails to reach at least 2.0% - which is right where the market consensus for the report currently stands.“

“USDJPY ran higher to retest 116 again in overnight trade as political rumours continued to swirl but faded as officials attempted to downplay the election/sales tax delay talk.“

“USDJPY may slip a little more below 115.00/10 but we expect the USD to find firmer support at or close to 114.00/10. We think the broader trend in USDJPY remains higher.”

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