After trading in a rather tight sideways range of a few hundred pips, USD/JPY may have found a volatility catalyst in the Moritomo scandal that has recently resurfaced. Nikkei News Asia said it best, and most succinctly when they said, “The revived scandal threatens Prime Minister Abe's grip on power."
Either way, the USD/JPY downtrend remains entrenched below on closes below 107.095 (spot at 106.43), and institutions are looking for the broadening potential that USD/JPY could retest 100 if the scandal erupts.
The JPY has yet to break the March range of 105.25-107.20. However, news that Abe’s key minister, Aso will skip the G20 meeting and further developments on the Moritomo Gakuen, the educational foundation with supposed nationalist agenda could cause the monthly low to break. The break would likely happen quick if Abe’s political future based on his promise last February were likely to be exercised ending his bid to become Japan’s longest running Prime Minister.
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