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JPY still adjusting lower after policy surprises from Japan - BTMU

FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that Yen weakness is the main trend in the currency market.

Key Quotes

"The yen has continued weaken in the Asian trading session extending its renewed decline since the end of last month after the BoJ announced accelerated monetary easing and the GPIF announced more aggressive than expected asset diversification targets.”

“Yen weakening momentum has since been reinforced by evidence that Japan fell back into technical recession which prompted the Prime Minister Abe to delay the next planned sales tax hike to April 2017 and call snap elections."

"Yen weakness is one of the clearest trends heading into year-end which is likely encouraging speculative yen selling lifting USD/JPY and EUR/JPY towards the 120.00 and 150.00-levels respectively."

"The BoJ’s nominal trade-weighted yen has fallen back to its lowest level since late 2007 as it moves to within touching distance of the pre-global financial crisis lows. On a real trade-weighted basis the yen may have fallen to its lowest level since the 1970’s."

"The weakness of the yen should significantly improve Japan’s external competitiveness. Japan’s export performance has been disappointing since the yen started to weaken sharply from late 2012 especially between May 2013 and May 2014 when exports remained stable."

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