With Abe up in the firing line this weekend the question is what will be the reaction in yen pairs when the market re-opens?
On balance the market is geared up for an Abe win and probably leaning towards the resounding 300+ seats win
With USD/JPY flapping around like a fish out of water it’s going to be quite hard to pick a trade.
If the results are good then we’re likely to get a reactionary jump in USD/JPY, but it may not be big or last due to being priced in.
What may move the market after is any speech by Abe detailing his plans moving forward. From this the market maybe expecting big things and will be keen to hear details of either further stimulus or policy changes that will markedly help the economy.
So trading in the early week will be two fold. The actual result numbers and any guff that follows. The big risk is if Abe fails in the vote and that would potentially be absolute carnage for Japanese markets and the currency. If you’re short yen into the weekend then it might be wise to have a stop in a couple of hundred pips in below the price come the close tonight as an Abe loss will probably see USD/JPY down 500+ pips. It’s probably a very small risk but it’s best to be prepared.
Where will USD/JPY be after the Abe election?
Over 120 404 votes
117-120 188 votes
sub 117 100 votes
Total 692 votes
