USD/JPY: Driven higher by hung parliament – OCBC
USD/JPY rose, following hung parliament outcome. According to Japan’s NHK public TV, LDP coalition is set to lose a 233-majority in the 465 seat lower house. USD/JPY was last seen at 152.55 levels, OCBC’s FX analysts Frances Cheung and Christopher Wong note.
Near term risks skewed to the upside
“LDP coalition only garnered 215 votes and would urgently need to find partners. The Constitutional Democratic Party of Japan, led by centrist leader/ former PM (2011-12) Yoshihiko Noda made huge gains to 148 votes. He can push to seek a coalition with other opposition groups, but it was last known that his party has had little success finding partners.”
“A hung parliament means that LDP coalition may face challenges passing policies in parliament. Uncertainty would weigh on Japanese equities and JPY in the interim. BoJ meeting (Thu) is likely a non-event as policymakers are likely to hold off rate increases until there is greater clarity with government and economic policies. Slowing BoJ policy normalisation and Fed in no hurry to cut, alongside US election risks may imply that USDJPY may well stay supported in the interim.”
“Bullish momentum on daily chart intact while RSI is again rising towards overbought conditions. Near term risks skewed to the upside. Resistance at 155 and 156.50 (76.4% fibo). Support at 151.50 (200 DMA), 150.60/70 levels (50% fibo retracement of Jul high to Sep low, 100 DMA). We cautioned that verbal intervention could kick in only if USD/JPY trades quickly up to 155/156 levels but we doubt there will be actual intervention.”
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FXStreet Insights Team
FXStreet
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