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USD/JPY to trade volatile into Japanese snap election - Nomura

FXStreet (Bali) - According to Yujiro Goto, FX Strategist at Nomura, USD/JPY is likely to trade in a volatile manner into the more than likely Japanese snap election, although the Strategists does not expect the trend of JPY weakness to be altered.

Key Quotes

"BOJ Governor Kuroda's stance on Prime Minister Abe's likely decision to delay the tax hike will be important for USD/JPY in the near future. Governor Kuroda is likely to state the importance of fiscal consolidation, but Monday's weak GDP growth number will make it difficult for Governor Kuroda to sound hawkish at the press conference."

"In addition, opinion poll results in the run-up to the election, which is likely to be set for 14 December, should increase market volatility. Even though the approval rating of the Abe cabinet has been declining, it remains relatively high."

"In addition, there is still a significant difference in popularity ratings between the ruling coalition and opposition parties. Thus, we expect poll results to continue showing a higher possibility of the ruling coalition securing a majority easily, supporting mid-term JPY weakness trend, in our view."

"USD/JPY is likely to trade in a volatile manner into the election, but we do not expect the trend of JPY weakness to be altered."

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