USD/JPY: Eyes on coalition formation – OCBC
USD/JPY extended its decline, tracking UST yields lower. Pair was last at 149.71 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.
Risks remain skewed to the downside
"Focus is also on coalition formation, in particular whether LDP and JIP managed to strike a deal. This alliance can get 231 seats. Although it is 2 short of the 233 simple majority, this can bring LDP’s Takaichi closer to the PM role. Elsewhere, other opposition parties are also discussing the plausibility of forming a coalition to put up a fight."
"In the interim, we should continue to expect more political jostling amongst politicians ahead of 21 Oct, when the parliament will meet and vote on choice of PM. Elsewhere, BOJ Governor Ueda told reporters that there’s no change in our stance that we will adjust the degree of monetary easing if our confidence in hitting the outlook increases."
"Apart from who the PM will be, policy implications on debt, deficit and BOJ path of policy normalisation, US-China tensions and broader risk sentiments are also other factors that may affect USD/JPY. Bullish momentum on daily chart faded while RSI fell. Risks remain skewed to the downside. Next support at 149.67 (61.8% fibo), 148.50 (50 DMA). Resistance at 150.35 (50% fibo), 151 (38.2% fibo retracement of the run-up) and 151.90 (23.6% fibo)."
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FXStreet Insights Team
FXStreet
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