The US dollar found itself surging in its pair with the Japanese yen over the last few days.
This was down in large part to the news from the country that its Prime Minister, Shinzō Abe, was quitting for health reasons.
Abe has been in charge of the Japanese government for several years, and his shift out of office was almost certain to cause a response from the yen.
However, while changes at the top of a political system can often influence the value of a currency and nudge it in one direction or the other, this particular move seemed additionally influential given Abe’s past.
Abe was heavily associated with the long-running policy of keeping interest rates low in order to stimulate the economy – an approach that, in the Japanese context, has since been nicknamed ‘Abenomics’.
He is likely to be succeeded by an ally of his, Yoshihide Suga, who is expected to broadly continue Abe’s policies.
Now that the issue is settled, the dollar’s rise against the yen earlier in the week may appear a bit less sustainable.
This could be especially pertinent if there is a further move away from the dollar in the midst of fears over the US central bank’s promise of indefinitely low rates.
According to analysts, if this happens, the USD/JPY pair could find itself facing the 106.35 level on the price charts.
Beyond that, it could plummet as low as 105.35.
From there, it would begin to contemplate reaching 105.00, which as a whole number could be interpreted as psychologically significant – and hence increase the chances of a deeper sell-off.
Strategists have also plotted a potential move for the pair if the dollar was to cling onto some of the stabilising moves it saw on Thursday and into Friday.
It could reach as high as 107.00 or later 107.50, though some analysts appeared to believe that it would not get much further than that.
In terms of the economic calendar, meanwhile, next week looks busy for the yen.
Monday will begin with a preliminary coincident index for July, which is due out at 5am GMT.
This looks set to show a change from 76.6 to 79.
At the same time, there will be a leading economic index for July, which will also be preliminary.
This is forecast at the moment to show a rise from 84.4 to 84.6.
Later in the day, there will be some more significant releases.
Gross domestic product figures for Q2 2020 will be out at 11:50pm GMT.
These are set to show a change from -7.8% to -0.7%.
Current account levels for July will also be out at this point, as will bank lending figures.
Labour cash earnings for July will be out in the same hour, this time just after 11am GMT.
- Olympic Legend Usain Bolt Lost $12m in Savings Scam
- Phoney Pastors Caught Running $28m Church-Based Ponzi Scheme
- Withdrawals at Binance Raise New Concerns
- “New Technology” Scam Rakes in $575m
- Charges Against SBF Shed Light On Approach Of A Potential Crypto Clampdown
- Crypto Scam Of The Year Makes HSBC’s List Of The 12 Scams of Christmas
Olympic Legend Usain Bolt Lost $12m in Savings Scam
Phoney Pastors Caught Running $28m Church-Based Ponzi Scheme
Safest Forex Brokers 2023
|Broker||Info||Best In||Customer Satisfaction Score|
|#1||Your capital is at risk Founded: 2006||Globally regulated broker||
BEST CUSTOMER SUPPORT Visit broker
|#2||Your capital is at risk Founded: 2014||Global Forex Broker||
BEST SPREADS Visit broker
|#3||73 % of retail CFD accounts lose money Founded: 2014||Global Forex & CFD Broker||
Best Trading Conditions Visit broker
|#4||67% of CFD traders lose Founded: 2007||Global CFD & FX Broker||
ALL-INCLUSIVE TRADING PLATFORM Visit broker
|#5||79 % of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money. Founded: 2008||Global CFD Provider||
Best Trading App Visit broker
Stay up to date with the latest Forex scam alerts
Sign up to receive our up-to-date broker reviews, new fraud warnings and special offers direct to your inbox