As was widely expected in Japan, the general election held yesterday sent the Shinzo Abe coalition back into power, with the Prime Minister now free to push through his plans to further weaken the Euro which will, hopefully, revive the stagnant Japanese economy. In spite of the election, however, the Japanese Yen edged higher in Asian and European Yen trade as investors’ risk aversion rose in the wake of the recent plunge in oil prices.
As reported at 8:23 am (GMT) in London, the USD/JPY pair was trading at 118.38 Yen, a loss of about 0.3%, but recovering from the session low of 117.78 Yen. The pair moved away from last week’s 7-year peak at 121.86 Yen, and is holding just above last Thursday’s 2-week trough at 117.44 Yen. The EUR/JPY was also lower and trading at 147.27 Yen, while the EUR/USD was trading at $1.2435, a loss of 0.2%.
Euro Pressure Relentless
The Euro is also likely to remain under significant pressure after the European Central Bank lowered its inflation expectations yet again, which prompted speculators to increase their own bets that the ECB would pull out the heavy artillery with massive easing beginning early in 2015. The ECB said that inflation was likely to fall to about 1.69% within the next five years, and that forecast was precipitated by the oil price crash.