JPY: LDP loses majority – ING
|The weekend election in Japan saw the Liberal Democratic Party (LDP) lose its ruling majority in parliament for the first time since 2009, ING’s FX analyst Chris Turner notes.
Very little chance of a rate hike
“The vote seems to be a sign of diffidence from the electorate in response to a series of LDP funding scandals. While the LDP still commands the largest number of votes in parliament it now seems there will be a period of uncertainty as political parties try to horse-trade into power.”
“Presumably, the political uncertainty may weigh on corporate investment decisions, though some argue that whoever takes power, some increased fiscal stimulus could be coming and that's why the Nikkei 225 rallied 1.8% overnight. More immediate for the yen will be Thursday's Bank of Japan meeting.”
“The market sees very little chance of a rate hike, although at ING we are forecasting a hike in December. With volatility likely to rise further into next week (exactly the wrong conditions for the carry trade), we do not favour chasing USD/JPY higher from these levels. Let's see whether USD/JPY today closes above or stalls at some key resistance near 153.50.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.