Forex - Japanese yen stronger as Abe's party wins solidly in polls

Investing.com - The Japanese yen strengthened in early Asia on Monday after a solid victory by the ruling party in weekend polls.

USD/JPY traded at 118.43, down 0.30%, while AUD/USD changed hands at 0.8244, down 0.02% and EUR/USD held at 1.2472, up 0.08%.

Prime Minister Shinzo Abe led the ruling coalition to a landslide victory in Sunday's early general elections, as widely expected, with local media projecting it now dominates two-thirds of the lower house of parliament that allows it to override decisions by the upper chamber.

In the absence of strong opposition, the ruling parties appeared to have won 326 seats, well above 317, two-thirds of the 475-seat House of Representatives (the total was reduced from 480 in this election), public broadcaster NHK reported.

Japan is to publish reports on the Tankan manufacturing and non-manufacturing index and the and the Australian Mid-year Economic and Fiscal Outlook (MYEFO) is due at 1230 local (0130 GMT).

Analyst forecasts for the fourth quarter Tankan sees the Major Manufacturing Diffusion Index and Non-manufacturing DI to be unchanged at +13 (0850 Tokyo, 2350 GMT).

Last week, the dollar gained ground against the euro on Friday following the release of strong U.S. economic data and surged to more than five year highs against the commodity-exposed Canadian dollar as oil prices continued to drop.

The preliminary reading of the University of Michigan's consumer sentiment index rose to 93.8, the highest level since January 2007 and ahead of forecasts of 89.7. Consumer sentiment was boosted by the improving outlook for employment and wage growth and lower gasoline prices.

The data underlined expectations for a hike in U.S. interest rates by the Federal Reserve next year.

The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.03% at 88.57.

In the week ahead, investors will be awaiting the outcome of Wednesday’s Federal Reserve policy meeting for further clarification on when interest rates might start to rise. Japan’s central bank is also to hold a policy setting meeting next week. The euro zone is to produce what will be closely watched reports on private sector activity.

On Monday, Switzerland is to publish data on producer price inflation. In the euro zone, Germany’s Bundesbank is to publish its monthly report. The U.K. is to release private sector data on industrial order expectations.

Later Monday, the U.S. is to release reports on manufacturing activity in the New York region and industrial production.