Yen Ready to Tumble Hard and Fast

According to currency analysts, the Japanese Yen is poised to fall to a level not seen in more than seven years as investors await the Bank of Japan’s move to an extremely aggressive monetary posture in accordance with the demands of the new Japanese government headed by Shinzo Abe.

As at 11:19 a.m. (JST) in Tokyo, the USD/JPY pair was trading at 85.91 Yen, retreating from the 84.64 Yen traded during Friday’s overnight hours. On the last trading day of the year, the U.S. Dollar is nearly 11.6% higher for the year, and will likely see the biggest percentile rise since 2005 against the beleaguered Japanese Yen. Analysts don’t believe that a new year will bring any relief to the Japanese currency, as Abe has promised to battle deflation with a one-two punch combination of heavy fiscal spending and monetary easing.

The U.S. Dollar, meanwhile, is the focus for forex players today as they watch intently the battle raging on the floors of the U.S. Congress. The fiscal cliff crisis must be addressed today or else $600 billion worth of spending cuts and tax increases will automatically be put into effect beginning tomorrow. The two key parties have continued to disagree over the way forward but are due to reconvene later today.