USD/JPY Dives Below 105.00 Level After PM Abe’s New Cabinet Line-Up

Talking Points:

• Japan Prime Minister Shinzo Abe Unveils 5 Women to Sit In his Cabinet
• Yasuhisa Shiozaki Is Appointed as Health Minister in Abe’s Cabinet.
• USD/JPY Plunges Below 105.00 After the Cabinet Reshuffle Announcement.

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Prime Minister of the third-largest economy, Shinzo Abe, had a new line-up in his Cabinet and was announced by Japan’s Chief Cabinet Secretary Yoshihide Suga. The announcement swept the headlines as the Japanese Government sent a strong message about his firmness on restoring women as workers and leaders by electing five-women to sit on his Cabinet. Moreover, Yasuhisa Shiozaki was appointed as health minister, which puts him in charge of the world’s biggest retirement fund. He is believed to be a candidate that favors the re-weighting of the Government Pension Investment Fund to hold more risky assets.

The reaction of this event caused the Yen to strengthen against the US Dollar to trade back below 105.00 level. In addition, the announcement resulted in the benchmark Nikkei 225 stock index to erase most of it earlier gains. This repercussion may have been due to a deterioration in the possibility of further easing by the Shinzo Abe government.

In regards to technical analysis,DailyFX Currency Strategist Ilya Spivak mentions near-term support at 104.84 and resistance at 105.24. He remains flat for now as he argues against entering short with prices trading in close proximity to support level and there is an absence of a defined bullish reversal signal.Meanwhile according to DailyFX Speculative Sentiment Index, 39 percent of FXCM retail traders are long USD/JPY.

USD/JPY 5 Minute Chart

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Edward Hyon, DailyFX Research Team

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