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FXstreet.com (Barcelona) - The weakening in the yen since mid-November derives mostly from the expectation of much more aggressive BoJ policy under duress from the new LDP government. According to the NAB Analyst Team, "The risk now is that the BoJ will under deliver relative to what is already priced in to the yen, at least until the changing of the BoJ guard in March and April."

However, "We doubt the recent highs on the USD/JPY and JPY crosses will be exceeded until the latter half of 2013." On top of the gathering headwinds to yen strength from Japan's deteriorating external payments position, we suggested that USD/JPY could reach Y86 by end-2012, whereupon consolidation/partial retracement of yen weakness was likely pending the actual implementation of much more aggressive BoJ policies.

These, we suggested, could be delayed pending the changing of the BoJ guard in March and April 2013 when the terms of the BoJ Governor and both of the current deputies expire. "Thereafter, a move up to at least Y90 was likely later in 2013." they predict.

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