Markets have decided that the best way to play expectations that Shinzo Abe -- who favors aggressive monetary easing at the BOJ -- will be the next Japanese prime minister is to go short the yen. But HSBC's currency strategists note that investors may be getting ahead of themselves. Many of the proposed policy changes, including foreign bond purchases, investment in government-issued construction bonds, and a higher inflation target are fairly radical. The end result may take more time to negotiate, and may be watered down. "Should we really sell the JPY now on the basis of policy changes, which may or may not change sometime in the middle of 2013?" HSBC is sticking with its USD/JPY forecast of 78 for year-end 2012. Pair was at 81.85 recently.
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