New Japan LDP Head Means More Pressure On BOJ To Ease

Japan's main opposition party electing former Prime Minister Shinzo Abe as its new leader means the BOJ may be pressed more to ease monetary policy, potentially putting downward pressure on the JPY, says Kenichiro Ikezawa, fund manager at Daiwa SB Investments. Abe is expected to advocate a higher inflation target as key to getting the nation out of deflation. "If opposition party demands more easing, the government is likely to put more pressure on the BOJ," he says; "earlier easing then becomes more likely." Meanwhile, the focus in the broader market is on the Chinese economy with its stock markets continuing to fall amid slowdown concerns, Ikezawa says; "unless those concerns ease, any yen weakening momentum is unlikely to last long." The USD/JPY is at 77.71.