Published at 00:16 (GMT) 06 Feb

USD/JPY, EUR/JPY Flows: NKS: BoJ Shirakawa Moves To Avoid Lame-Duck Period (NVQC5601)

NKS: BoJ Governor Masaaki Shirakawa's decision to step down early gives hope to those eager for "regime change" at the central bank. Shirakawa said Tuesday that he will resign March 19, ahead of the April 8 end of his term. While the BOJ is leaning toward a pause on additional monetary easing this month, the yen slid lower against USD on news of the governor's early departure as investors speculated that bolder policy steps will now come sooner.

The government is looking to present its nominees for the next governor and deputy governors to the Diet together and is aiming to have them confirmed by March 19, when the two deputies' terms end.

On FX, BoJ Shirakawa chooses to step down 3-weeks earlier, to coincide with his deputies Nishimura and Yamaguchi. USD/JPY, Cross/JPY rallied - on speculation that the earlier transition at the top in BoJ (Top 3) will see earlier bold easing measures. And also broad based risk taking. USD/JPY at 93.60-62, hit 2-year 9-month highs of 93.77-78, eye 94.00 Option barriers. Focus on new choices for Governor and 2 deputy Governors - as DPJ says it is not opposed to Ex MoF Officials. EUR/JPY up at 127.15-18, eye morning 2-year 10-month hghs of 127.41-42, then 127.50/128.00 Options, as ECB likely to stay tomorrow, while BoJ to ease more. WL