USD/JPY plunges amid reports of Shinzo Abe’s resignation
The US dollar fell sharply against the Japanese yen, after NHK reported that the Japanese prime minister would be stepping down due to ill health.
- Yen jumps ahead of Abe's rumoured resignation as prime minister
- Growing concerns surrounding Abe's ability to serve out his term due to ill health
- Upsides still expected for USD/JPY following US Fed's dovish statement
USD/JPY sees biggest drop in two weeks
The USD/JPY fell sharply after it was reported that Japan prime minister Shinzo Abe would be stepping down from his post.
The currency pair lowered to 106.104 at 14:00 JST on Friday 28 August 2020 – the largest decline seen in two weeks.
IG’s market data shows that ‘sells’ form 51% of all trades on the USD/JPY counter so far this week.
Additionally, 58% of all opened orders on the forex major currently hold ‘buy’ (long) positions, still indicating a near-term expectation for price to rise.
Shinzo Abe set to step down due to ill health
Japan public broadcaster NHK reported earlier on Friday that Abe will announce his resignation from office during a scheduled press conference due to start at 17:00 local time.
Abe is reportedly stepping down because of ill health, following two recent hospital visits within the span of one week.
This week, media speculation about whether Abe would be able to serve out his current term as prime minister, due to end in September 2021, have been rife.
Members of Abe’s political party, Liberal Democratic Party (LDP), have since attempted to put those concerns to rest, stating that their party leader is ‘already on the mend’.
Government chief spokesperson Yoshihide Suga also told the media that he has been meeting with Abe twice a day, and had not noticed anything worrying regarding the prime minister’s health.
‘It’s premature to talk about “post-Abe”, as he still has over a year left in his term,’ Suga was quoted as saying.
This past Monday (24 August 2020) marked Abe’s eighth year in office, become Japan’s longest serving leader, surpassing his great-uncle Eisaku Sato’s seven years and ten months reign.
‘What is clear is that Abe's health is not in good shape,’ Mikitaka Masuyama, a professor of politics at the National Graduate Institute for Policy Studies, told AFP news agency.
‘But I think he will stay in office while managing his illness.’
Ready to take a position on forex majors?
Why are upsides still expected for USD/JPY?
Nevertheless, the USD/JPY had moved comfortably higher 12 hours earlier, after backend US Treasury yields shot up following US Fed chair Jerome Powell’s decision to let inflation to stay above the 2% target ‘for some time’, in a bid to boost the economy.
Following that, OCBC FX strategist Terence Wu had written that firm resistance could be seen near the 107.00 area, adding that a successful breach may put 108.00 into view.
‘Much will depend on whether the move in the US Treasury space will see further traction. Immediate support at 106.60,’ he stated.
He also noted that if US Treasury yields sustain a move higher overnight, ‘yield differentials may potentially come into play in favour of the USD’.
‘In such a situation, expect the USD/JPY to be the most reactive to the upside’.
How to trade FX with IG
Are you feeling bullish or bearish on USD/JPY and other currency pairs? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Start trading forex today
Find opportunity on the world’s most-traded – and most-volatile – financial market
- Trade spreads from just 0.6 points on EUR/USD
- Analyse with clear, fast charts
- Speculate wherever you are with our intuitive mobile apps
See an FX opportunity?
Try a risk-free trade in your demo account, and see whether you’re onto something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See an FX opportunity?
Don’t miss your chance – upgrade to a live account to take advantage.
- Get spreads from just 0.6 points on popular pairs
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See an FX opportunity?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets