By TraderVox.com
Tradervox.com (Dublin) – The Japanese currency dropped against the most peers as Bank of Japan officials prepare to hold a two day meeting to discuss the issue of easing. There is increased speculation of additional bond-buying efforts as the country heads to an election in December.
The yen dropped, as Liberal Democratic Party leader Shinzo Abe indicated that he would choose someone who favors easing as the governor of the central bank if elected the president. On the other hand, the 17-nation currency’s demand was limited as European finance ministers prepare to meet to discuss the Greek issue. The ministers had indicated that they will have a decisive report at the end of tomorrow’s meeting. The Australian dollar was advanced as Asian stocks boosted the demand for commodity related currencies.
According to Joseph Caprso, a strategist at the Commonwealth Bank of Australia in Sydney, the Japanese election is the main driver of the yen and this might continue in the near term as political debate heats up in Japan. Capurso noted that the market expects these “knee-jerk reactions” in the medium term for the yen. The yen has been on decline since the Prime Minister Yoshihiko Noda dissolved the lower house of the Parliament to pave way for the election.
The Japanese currency dropped against the dollar to trade at 81.25 at the close of trading in Tokyo down from its close on November 16th of 81.32. The currency had earlier touched its seven-month low of 81.59, which is the weakest since April 25. Agianst the euro, the yen traded at 103.67 after earlier touching its lowest since October 25 of 104.11 yen per euro.
The yen has declined as opinion polls show that majority favor Abe, the LDP leader. The Japanese election will be held on December 16 later this year. According to Mike Jones, a Currency Strategist in Wellington at Bank of New Zealand, the market is expecting the gains in dollar-yen pair to fade as a result of consolidation.
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