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Japanese yen rises against dollar as Abe prepares to name BoJ successor

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Investing.com - The U.S. dollar was lower against the yen during Tuesday's Asian session as Japan's Prime Minister Shinzo Abe prepared to name a successor to the Bank of Japan.

The USD/JPY pair declined, dropping 0.45% to 89.08. The pair is likely to find support at 88.09, Thursday's low, and resistance at 89.61, Monday's high.

The move represents a reversal from recent action, which has seen the Japanese yen trade to successive new multi-month lows against the dollar. A level near 89 has not been seen since May of 2010.

Ahead of his election in December, Japan's Shinzo Abe called for broad reform to Japan's monetary policy, namely, raising the Bank's inflation target. Japan has been struggling with deflation for nearly two decades as its economy has stagnated.

Following his election, Abe publicly pressured the Bank to make good of his inflationary objectives, a call which many of his critics saw as weakening the Bank's independence.

The term of the Bank's current Governor Masaaki Shirakawa is set to expire in April. Abe will be tasked with naming a successor, and it is likely that he will pick someone more open to boosting inflation.

Investors are always awaiting data on Japan's machine tool orders. There are no consensus expectations, but the previous report indicated a drop of 21.3%. The data point is not very significant on a relative basis. but a sharp decline would suggest that Japan's economy is weakening.

On the other side of the pair, the dollar was up slightly on the session. The U.S. dollar index traded up about 0.03% to 79.53. This minor dollar strength may have contributed the weakness seen in the USD/JPY pair.

Investors may be showing concerns about the global economy, running to the U.S. dollar as a safe haven asset.

According to the U.S. Treasury, the country could enter a period of default if the nation's debt ceiling were not raised before the end of February

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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