LDP-led Coalition Secures (Super) Majority
USDJPY jumped almost a full big figure shortly after the Asia open on the back of Japan’s weekend election results. The LDP scored a landslide victory as expected, but the scale of the electoral shift significantly surpassed expectations. Not only did the LDP win an outright majority in the Lower House, but the future coalition government will command a two-thirds majority if, as expected, the junior New Komeito party is invited to join an LDP-led coalition. This supermajority should facilitate the process of legislative reform, helping Abe push through his manifesto pledges once he is appointed Prime Minister on Dec 26th. His views are well known on the need for greater BoJ policy activism, and even if he opts to leave BoJ Law alone, he will have a significant say in who succeeds Governor Shirakawa and his two deputy governors in 2013. Overnight USDJPY traded 83.86-84.47 returning to intraday highs last seen in April 2011.
Click here to read the full report: UBS Morning Adviser Europe
UBS Investment Bank