JPY ready to explode higher or false hope ?

The Japanese Prime Minister , Shinzo Abe, just resigned as reported this morning over ‘health issues’, citing a flare up on this chronic ulcerative colitis. However he did not name a successor, despite this the JPY saw sharp bidding with most XXX/JPY pairs trading at least -0.50% on the day. The reason for  this is because Shinzo has always been supportive of the economy and markets, leading to a fairly weak JPY currency  in contrast to the likes of for example the FED with their recent inflation targeting program which allows inflation to overstep boundaries.
Markets are focusing on who the next successor could be, and if this individual will maintain the same level of political stability as Shinzo. According to MUFG Derek Halpenny

“PM Abe’s departure creates inevitable uncertainty on the outlook for ‘Abenomics’ but the essence of ‘Abenomics’ is the strong coordination between government and the BoJ and its aggressive monetary easing stance. That’s not going to change“

It is therefore likely that this new individual will not make changes from a macro policy standpoint , which could see the inital JPY bid reverse as the fear of macro policy changes under new directorship , is likely redundant. To add to this Viraj Patel , an independent analyst revealed how during the 2007 Shinzo abrupt resignation event , USD/JPY moved 3% higher in the aftermath due to political uncertainty, this time around however, USD/JPY remains -6% lower when compared to 2007 price action, suggesting that market participants expect there to be no changes in the macro environment. The key here however is the ‘political stability and the administration’s ability to deliver effective policy’ says Bank of America analyst, Devalier.
Something to consider 
Looking at other currencies, despite the major dollar weakness, the Yen has not strengthened much against the dollar , this is the case even when looking at emerging market currencies. Forward markets have in fact shown a further decline in , illustrating continued depreciation. However , China have been at the forefront in global recovery, with PMI’s rebounding sharply faster when compared to other developed countries, thus there is this sense of misalignment between the value of the Yen and the growth displayed in China.  Contributing to this are increasing tensions between US-China , there is an increasing likelihood that these factors could trigger some upside positioning in the Yuan.