|

Japanese PM Takaichi’s ruling LDP wins snap election by landslide

Japanese Prime Minister Sanae Takaichi’s party, the Liberal Democratic Party (LDP), has won a landslide in Japan’s general election, securing a supermajority in the country’s lower house of parliament, Bloomberg reported on Sunday.

The coalition led by Takaichi's LDP has won 352 of 465 seats in Japan's House of Representatives, figures collated by public broadcaster NHK suggest, with the LDP alone securing a majority of 316.

Market reaction

As of writing, the USD/JPY pair is up 0.02% on the day at 157.15.

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

More from Lallalit Srijandorn
Share:

Editor's Picks

AUD/USD climbs to four-month highs near 0.7230

AUD/USD keeps its bid tone well in place for yet another day, this time advancing to the 0.7220-0.7230 band to hit fresh four-month high on Monday. The persistent uptrend in the pair comes on the back of the resurgence of the bearish trend in the Greenback amid unabated tensions in the Middle East. Next on tap in Oz will be the Westpac’s Consumer Confidence index, housing data, and speeches by the RBA’s Hunter and Hauser

USD/JPY holds on just above 154.00

USD/JPY weakens further and remains close to the 154.00 neighbourhood, or seven-month lows, ahead of the opening bell in Asia. The pair’s severe retracement comes in response to rising bets of a rate hike by the BoJ at its next meeting coupled with repatriation speculation, while the offered stance in the Greenback adds to the overall bearish mood.

Gold bounces off lows, back above $4,400

Gold builds on Friday’s losses, although it manages to regain some composure and reclaim the $4,400 mark per troy ounce on Monday. The yellow metal’s decline follows the move lower in the Greenback and steady caution ahead of key US data releases toward the end of the week.

Bitcoin and Gold Outlook: BTC and XAU remain pressured amid sticky US-Iran tensions
Bitcoin (BTC) is correcting below $79,000 on Monday, mirroring the broader cryptocurrency market’s lethargic, bearish-shifting outlook. The Crypto King was rejected near $81,500 last Thursday, suggesting investor exhaustion. Meanwhile, Gold (XAU/USD) remains pressed against the near-term $4,400 support, as focus shifts to the upcoming United States (US) Consumer Price Index (CPI) data on Friday.
Strong US jobs, Middle East tensions and key inflation data ahead
Good morning all, hope you enjoyed your weekend. Markets are starting the week after Friday’s stronger-than-expected US jobs report, which increased expectations that the Fed could raise rates at its September meeting. However, US markets are closed today for the Labor Day holiday, so liquidity should be lower and we may see slower price action.
Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.