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JPY shaken by Abe – TD Securities

FXStreet (Barcelona) - Analysts at TD Securities mention JPY trading flat after PM Abe’s announcement of snap elections and the postponement of the sales tax hike.

Key Quotes

“The USD finds itself playing defense as a better-than-expected ZEW survey out of Germany and a timid increase in UK's inflation have boosted both EUR and GBP, while the JPY is virtually flat after Prime Minister Abe announced the postponement of the sales tax hike and the call for snap elections in Japan. The DXY dollar index trades 0.4% down on the day.”

“Today there will be little in the way of data during the NA session, with only US PPI -- we look for falling commodity costs to continue weighing on producer prices -- and the NAHB Housing Activity index scheduled for release.“

“There are no key central bank speakers either. Therefore, we would expect the performance of equities, commodities, the reverberations of Japan's announcements, and flow to drive price action throughout the day.”

“The recent USDJPY rally appears to have stalled, and the market will wait to have more clarity about the likelihood of Abe's coalition winning the election before pushing the pair in either direction.”

“An announcement by credit rating agency Fitch that it will review Japan's rating due to the postponement of the tax hike is adds to the climate of uncertainty Japan will have to deal with in the coming weeks, which will weigh on the yen. Medium-term the path remains higher.”

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