The pair is likely to trade in a tight range today in Asia before the Bank of Japan kicks off a two-day policy board meeting Wednesday after the LDP, an advocate of powerful monetary easing won the Sunday’s election. The Nikkei reports that the Bank of Japan will discuss setting an inflation target at a two-day policy board meeting starting Wednesday but will make a final decision on it in January. Abe, which is expected to become premier on Dec. 26 following the landslide victory at Sunday’s election, has repeatedly called on the BOJ to double inflation target to 2% from the current 1% and use “unlimited” monetary easing to overcome deflation. But short-term players also brace for emerging risk of correction, with the immediate focus centering around Y82.42, or 38.2% retracement of the rally since November. Investors will also focus on developments on U.S. budget talks for implication for risk sentiment. The rate moved from Y83.61 to Y84.48, the highest since April 2011, on Monday.
EasyForexNews Research Team