LDP Power Handover Under Scrutiny

USD/JPY was offered on Monday amid broader greenback weakness, even as risk appetite has generally firmed up. Positioning ahead of Wednesday's FOMC meeting may have played a role here, while M&A news may have lent support to the yen, as SoftBank announced that it will sell Arm for as much as $40bn to Nvidia.

• Japanese news flow centres around the handover of power to Chief Cabinet Secretary Suga, who was elected as LDP leader yesterday and is expected to be named PM on Wednesday. The Nikkei reported that Taro Aso will remain the Finance Minister and Deputy PM, while per NTV Toshimitsu Motegi will retain his post as Foreign Minister. Later, NTV reported that Health, Labour and Welfare Minister Katsunobu Kato may replace Suga as Chief Cabinet Secretary.
• There is ongoing speculation whether Suga will choose to call a snap general election, but on Monday he told reporters that it would be hard to do it before bringing the spread of coronavirus infections under control. He added that ruling party executive positions will be decided today.
• USD/JPY last sits -3 pips at Y105.69. A move through yesterday's low of Y105.55 would open up Aug 28/19 lows of Y105.20/10. Conversely, a break above the 50-DMA at Y106.22 would shift focus to Sep 3 high of Y106.55.
• Japan will release its trade data tomorrow, before focus turns to the latest BoJ MonPol decision, due Thursday. Friday's CPI data will conclude Japanese releases for this week.