Before the debate of Shinzo Abe, the front-runner to become the next prime minister, and incumbent Yoshihiko Noda regarding polices of Japan, benchmark bonds advanced for a second day. Japanese shares consequently fell from a six-month high while the Japanese yen strengthened by 8 pips against the American dollar. In today’s Asian session, the weight of Japan’s export slump is expected to drag down the Yen.
A structural story is believed occurring in the Japan as the nation has lost the competitiveness of its exports, where Japanese are deemed to find themselves in very serious problems if they fail to dig themselves out. The total shipments are said to be 53.5 Trillion for January through October, which is down by 2.3 percent from the same period in the previous year. In effect, a negative contagion to trade and industry leads Japan to continuously suffer its worst year for exports.
Meanwhile, the release of the Beige Book brings better prospects for the US dollar. The American economy was stated to have a modest growth with hiring to remain steady as well even if the Federal Reserve reported to do little to calm concerns about slow growth and high unemployment. Consumer spending also increased at a moderate pace in most districts as jobs are added, leading manufacturing activities to immense and forecasting a 2 percent annualized rate of growth in Q3.
Thus, the political, financial and economic turmoil of Japan versus the anecdotal evidence of recovery of the US economy encourages that a long position be made for the USDJPY pair.
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