The release of the Westpac Consumer Sentiment and Wage Price Index data resulted to the rise of the Australian dollar by 54 pips versus the Japanese yen in the previous Asian trading exchanges. In Japan, political uncertainties led to the decline of the Samurai as markets speculate that the upcoming elections would lead to a shift in government.
The Aussie is seen to rise in today’s trades as consumer confidence rose to a 19-month high after the Reserve Bank of Australia cut interest rates to support economic growth. Australian consumer confidence increased by 5.2 percent in November, from a 1 percent-rise in the previous month, data showed. Despite the economy facing challenges in the mining sector, the global economy and the strength of the Australian currency, data showed that confidence among households is returning because of the previous rate cuts by the central bank. However, some analysts believe that further rate cuts are needed to support the improvement in consumer confidence.
The Yen on the other hand is expected to decline as Japanese Prime Minister Yoshihiko Noda said he was ready to dissolve the Lower House if the Liberal Democratic Party pushes with Diet reform measures. Further, speculations that the upcoming elections would result to a change in government favoring Shinzo Abe, are likely to pull down the Samurai as Abe maintains that his party would strongly urge the Bank of Japan for more easing measures, to include the unlimited printing of money. Given the foregoing factors, a long position for the Aussie-Yen pair is recommended in today’s Asian trades.
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