Archived IMT (2010.09.13)

KAN-OZAWA RUN OFF tomorrow will be closely watched by yen traders. The DPJ presidential election will be decided tomorrow, where voters include Party representatives in Japanese Diet (parliament) as well as local assembly members. Former PM Hatoyama is now supporting Ozawa against incumbent Kan. Latest polls indicate a very close race after Kan was in front last week. Ozawa, a vocal critic of the US has expressed his support for outright FX intervention to counter excessive yen strength. Thus, the immediate reaction to an Ozawa win would be seen as yen-negative, but do not forget that September is the end of the 1st half of the Japanese fiscal year, which usually involves repatriation by Japanese corporates and life insurers into the end of the month. Although USD weakness held into US afternoon trade, JPY made a sharp turnaround ahead of Wednesdays presidential race. EURJPY vulnerable to 107.20, but daily EURJPY oscillators show a viable push towards 108.60s. FOR MORE FREQUENT INSIGHTS & ANALYSIS follow me on TWITTER at http://twitter.com/alaidi