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JPY: USD/JPY Tests Multi Month Highs As LDP Coalition Loses Majority

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USD/JPY tracks in the 153.05/10 region in latest dealings, around 0.50% weaker since end Friday levels in the US. Earlier highs were at 153.27, which were at the strongest levels for the pair since end July. Yen is weakening amid political uncertainty in Japan, as Sunday's election showed the ruling LDP coalition lost its majority in the lower house elections. 

  • In terms of topside levels, July 31 highs were at 153.88, while on the 30th we topped out at 155.22. On the downside, the Oct 22 low is back at 150.50.
  • Near term focus will rest on if the LDP can form a coalition with the minor parties to form a stable government. The LDP slipped to 191 seats (losing 56), while its partner, the Komeito Party had 24 seats, so a total of 215 seats, short of the 233 required for a majority (see this link).
  • Some coalition possibilities include the Democratic Party for the People (DPP) and the Japan Innovation Party, see this link. Although what comprises on policy that need to maintain a coalition will be key market watch points. The Innovation Party is against further BoJ hikes for example (see the link above).
  • From Friday's session we had a positive end to the week for US yields, 2.5-3bps firmer for UST yields, the 2yr above 4.10%.
  • On the data front today, the local calendar is empty in Japan.  
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USD/JPY tracks in the 153.05/10 region in latest dealings, around 0.50% weaker since end Friday levels in the US. Earlier highs were at 153.27, which were at the strongest levels for the pair since end July. Yen is weakening amid political uncertainty in Japan, as Sunday's election showed the ruling LDP coalition lost its majority in the lower house elections. 

  • In terms of topside levels, July 31 highs were at 153.88, while on the 30th we topped out at 155.22. On the downside, the Oct 22 low is back at 150.50.
  • Near term focus will rest on if the LDP can form a coalition with the minor parties to form a stable government. The LDP slipped to 191 seats (losing 56), while its partner, the Komeito Party had 24 seats, so a total of 215 seats, short of the 233 required for a majority (see this link).
  • Some coalition possibilities include the Democratic Party for the People (DPP) and the Japan Innovation Party, see this link. Although what comprises on policy that need to maintain a coalition will be key market watch points. The Innovation Party is against further BoJ hikes for example (see the link above).
  • From Friday's session we had a positive end to the week for US yields, 2.5-3bps firmer for UST yields, the 2yr above 4.10%.
  • On the data front today, the local calendar is empty in Japan.