Stephen Innes
SPI Asset Management
The yen took a beating after Japan's ruling coalition fell short of a parliamentary majority, sparking concerns that political instability could delay the Bank of Japan's rate-hike plans well into 2025. Crude oil also slumped as Israel’s recent airstrikes on Iran steered clear of oil facilities, deflating another layer of geopolitical risk.
For local investors, however, the weaker yen is a silver lining. It boosts exporters and tempts traders back to Japanese stocks, weighed down by political uncertainty last week.
Tokyo trading houses most likely expected this outcome and swooped in on bargain-priced stocks. Much of the yen’s recent weakness reflects Japan's ultra-low interest rates compared to the U.S. and other major economies—a dovish stance likely to hold as Japan's new prime minister faces the hot seat of political challenges.
And with oil prices dropping like a stone and import costs easing, Japanese investors are breathing a sigh of relief.
Looking ahead, though, the U.S. dollar could remain on solid ground with sustained high rates in the U.S. as “Trump trades” build momentum. If Trump retakes the Oval Office, the prospect of tariffs could apply severe pressure on emerging markets, especially in Asia, adding a new layer of uncertainty to the regional market outlook.
SPI Asset Management provides forex, commodities, and global indices analysis, in a timely and accurate fashion on major economic trends, technical analysis, and worldwide events that impact different asset classes and investors.
Our publications are for general information purposes only. It is not investment advice or a solicitation to buy or sell securities.
Opinions are the authors — not necessarily SPI Asset Management its officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.
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