- The Japanese Yen (JPY) is rising after losses last week
- Takaichi won a landslide victory in the weekend election
- The US Dollar (USD) falls against major peers
- Weak data last week and China reducing US treasury exposure hits USD
The US dollar Japanese yen (USD/JPY) exchange rate is falling after six days of gains. The pair rose 1.55% in the previous week, settling on Friday at 157.21. On Monday at 19:00 UTC, USD/JPY trades -0.77% at 155.87 and traded in a range of 155.52 to 157.66.
The yen is rising following a landslide victory for Japan’s Prime Minister Sanae Takaichi’s Liberal Democratic Party in the weekend elections.
The impressive result saw the Liberal Democrats win more than 2/3 of the seats in parliament’s lower house on Sunday, giving them a free hand to pass their fiscal expansionist agenda without seeking approval from the upper house.
While the yen had been falling sharply heading into the elections, it appears to be a case of “sell the rumour, buy the facts,” with yen investors giving Takeichi the benefit of the doubt.
A combination of political clarity and worries over intervention has helped to lift the yen sharply higher
However, there could still be some reaction in Japanese government bond yields and the yen going forward as her policies are set in stone.
The U.S. dollar is falling against its major peers. The US dollar index, which measures the USD against a basket of currencies, is falling -0.77% on Monday to 96.88, after gains last week.
The US dollar is falling sharply, weighed down in part by a stronger yen and concerns about the health of the US labour market.
Data last week revealed that job openings fell to multi-year lows, while Challenger job cuts rose sharply. The data raises concerns over the health of the US labour market ahead of this week’s non-farm payroll report.
Reports that China has ordered financial institutions to reduce exposure to US treasuries, thereby accelerating de-dollarisation, are also weighing on the US dollar.
Chinese holdings of US treasuries hit a 17-year low following the orders.