Usd/jpy Remains a Sell on Rallies

Usd/jpy Remains a Sell on Rallies


Quotes from RBC Capital Markets:
-As expected, support from the main opposition parties was sufficient to ensure the bill to increase the consumption tax progressively from 5% to 10% passed through the lower house overnight. However, 57 DPJ MPs voted against the tax hike, causing USD/JPY to briefly spike to 79.79 as the wires reported this as "threatening party breakup" and the threat of early elections loomed.
-This, however, is a misinterpretation of events, even though it is true that only 43 MP need to leave the DPJ for the lower house majority to disappear. Voting against one bill, albeit an important one, is not the same as leaving the party and it is highly likely that a sufficient number of the rebels will remain in the DPJ for it to retain control of the lower house. We maintain that the legislation to raise the consumption tax is a positive development for Japan and JPY and USD/JPY remains a sell on rallies.


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