Yen is under pressure, Nikkei keeps rising - 26.12.2012

Japanese yen fell this morning to its lowest level in 20 last months. The USDJPY currency pair keeps growing, being at 85.46 this morning, the prices have not been so high since April 2011 (see the chart). Today the head of Liberal Democratic Party that has won the parliamentary elections, Shinzo Abe became the new Prime Minister. USDJPY, daily chart We recall that Abe has repeatedly called for significant monetary and fiscal stimulus to overcome deflation and reduce the negative effects of the high rate of the national currency. In contrast to the exchange rate downfall, stock prices of Japanese companies showed an increase. Tokyo stock index Nikkei 225 rose today almost by 1.5%, to 10230.36, reaching a 9-months high (see the chart). Nikkei 225, daily chart Due to low activity among market participants before the New Year's holidays the US dollar keeps being supported by concerns about the unresolved budget issue in the USA. The dollar index remains near two-week highs above 79.50 (see the chart). According to news reports today, Barack Obama is going back to Washington to resume negotiations on the fiscal issue. US dollar index, daily chart