RBA Minutes and Abe-lection

The US dollar climbed once again on Monday, gaining a half-cent in New York trading against the yen and euro. The gains were despite soft economic data. The Empire Fed was at 10.16 compared to 12.0 expected. US industrial production also slipped 0.1% compared to the +0.2% consensus.

The shadow of the terrible Japanese GDP data hung over the session as the country fell into a quadruple dip recession. Local reports say Abe could call a press conference in the hours ahead to announce a mid-December election.

Chatter about an election started two weeks ago so it's not a surprise but it will add to USD/JPY volatility. Polls show Abe likely to refresh his mandate but those polls were taken before the GDP data. No leader likes to campaign on a recession.

The ideas from opposition candidates will make headlines early in the campaign and it will be interesting to hear opposing ideas to Abenomics but trading strategies in elections can be tricky to map out. We could see USD/JPY slide on the announcement as specs head to the sidelines but at this point an election is largely priced in.

The other event to watch for in the hours ahead are the minutes of the Nov RBA meeting. We will be looking for comments on intervention after Kent's comments in a speech last week. Overall, the minutes at 0030 should be largely in line with the quarterly statement on monetary policy.