JPY: Weakness persists ahead of election – OCBC Bank

FXStreet Insights Team FXStreet

The report from OCBC Bank discusses the ongoing weakness of the JPY amid fiscal uncertainty ahead of Japan's election on February 8. The contrasting behavior of JGB yields suggests differing interpretations among investors regarding Japan's fiscal outlook. The report highlights potential intervention risks and the implications of the election results on the JPY's stability.

Fiscal uncertainty weighs on JPY

"Verbal intervention risks could rise as the 8 February Japan election keeps fiscal uncertainty weighing on the JPY. Intervention concerns should help cap USDJPY upside both before and after the vote."

"Fiscal worries typically weaken the JPY and push long-end JGB yields higher. The contrast between a relatively calm JGB market and a struggling JPY is notable, hinting at diverging views between bond and FX investors on potential LDP fiscal direction after a likely ruling coalition win."

"A majority win would strengthen PM Takaichi’s mandate to pursue 'Sanaenomics' (fiscal stimulus), which could pressure the JPY. However, the JPY could stabilise if a clear LDP majority reduces the need for looser fiscal or monetary measures to court opposition support."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.