Japan snap election and sales tax announcement in the works
- JP equities were sold off and USDJPY came off yesterday - a knee-jerk reaction
- Remain very positive and bullish on USDJPY as well as Japanese equities
- We are in the 116-120 trading range for the next six months
By Kay Van-Petersen
I think there is a very high probability of already getting an announcement this afternoon that will call for a snap election as well as issue a delay to the sales tax hike decision.
- If parliament was to be dissolved immediately, early December would mark the start of a snap election, with a final election date around mid December (14-16)
- Abe has the power to do this without voting needed by the house
- April 2017 the proposed date at which the sales tax hike will be postponed
- Here the House would have to vote on a changed and new tax bill
- There is also chatter about a potential stimulus package, with numbers as high as USD42 bilion (JPY 5 trillion) being heard. There also seems to be a question of quality stimulus versus quantity stimulus (ie they don't have that much more money to spend)
USDJPY - today
A profitable trading day to you all.
Kay Van-Petersen is Asia macro strategist at Saxo Capital Markets in Singapore