Japan's parliament approved the government's nominees to the Bank of Japan's board, confirming two economists who have signaled support for monetary stimulus. The two could join the board as soon as next month's policy meeting.

Takahide Kiuchi of Nomura Securities Co. and Takehiro Sato of Morgan Stanley MUFG Securities Co. were approved by the government-dominated lower house today after the upper chamber voted in favor of them yesterday. Prime Minister Yoshihiko Noda's picks will take the places of two businessmen, breaking the practice of replacing members with candidates from similar backgrounds.

The opposition-controlled upper house blocked BNP Paribas SA economist Ryutaro Kono's nomination in April after some lawmakers said he wasn't a strong enough advocate of stimulus. Today's vote may encourage politicians who are pressing the central bank to boost its 40 trillion yen ($503 billion) asset- purchase program to spur growth and end deflation.

Sato wrote in a May 15 report that “the prevailing political climate makes an end to easing unlikely” and said in an interview last month that the BOJ's inflation forecast for next year was “wishful thinking.” Kiuchi has said that the bank may need to cut growth and price forecasts.

Board member Koji Ishida said today that the bank will continue to conduct powerful monetary easing to achieve its 1 percent inflation target.

Eoin Treacy's view We have long pointed out that Yen weakness was a necessary catalyst to prompt investor interest in Japanese equities. Therefore today's move by the Diet to impose two monetary stimulus advocates to the board of the Bank of Japan can only be viewed as a positive development. (Also see David's comment on June 13th).

The US Dollar rallied to break the multi-year downtrend by mid-March and subsequently pulled back to test the region of the 200-day MA. It pushed back above the psychological ¥80 today and a sustained move below ¥78.50 would now be required to question medium-term scope for additional Dollar strength.

Among the Japanese members of the S&P Pan Asia Dividend Aristocrats pharmaceutical and life science companies such as Eisai (4.48%), Hisamitsu Pharm (1.86%), Kaken Pharm (4.05%) and Sysmex (1.12%) are relative strength leaders. While the others have all surged over the last couple of days, Sysmex has returned to the area of the 200-day MA and the upper side of the underlying range where it has found support.

Japan Tobacco (2.63%) found support in the region of the 200-day MA last month and a sustained move below ¥400,000 would be required to question medium-term scope for continued upside.

Lawson (3.51%) encountered resistance in the region of the 2008 peak from mid-May and has entered a period of consolidation which has at least partially unwound the overbought condition relative to the 200-day MA. Provided it holds above the psychological ¥5000 the benefit of the doubt can probably continue to be given to the upside.

Nippon Telegraph (4.51%) found support in the region of the post tsunami low three weeks ago and rallied impressively this week. A sustained move below ¥3250 would now be required to question medium-term scope for additional upside.

Shimamura (1.55%) has returned to test the region of the 200-day MA where it has found at least near-term support. A sustained move below ¥8500 would be required to check potential for additional upside.

UniCharm (0.80%) rallied from the region of the 200-day MA last week and a sustained move below ¥4000 would now be required to question the consistency of the medium-term uptrend.