Takaichi Effect? The Yen Suddenly "Wakes Up"
USD/JPY weakened near 155.90 at the start of the Asian session on Tuesday (January 10th). The Japanese yen strengthened after the election results in Japan sparked positive sentiment towards the currency. The market also began to reduce its dollar positions as focus shifted to a series of important economic data from the United States.
The main trigger came from Japanese politics: the Liberal Democratic Party (LDP), led by Prime Minister Sanae Takaichi, secured a landslide victory in Sunday's election. The LDP reportedly won 316 of the 465 seats in the lower house, a rare achievement. This news was reinforced by a "warning" from Japanese officials, who reiterated their readiness to monitor the yen's movements in the foreign exchange market.
From the US side, the tone of Federal Reserve officials also influenced the dollar's direction. Fed Governor Stephen Miran stated that the weakening dollar was not yet a major problem for the central bank at this time. This statement led some market participants to believe that the Fed was taking its time in responding to the USD's movements, leaving room for a dollar correction.
Next, the market awaited US Retail Sales, released Tuesday evening, for the next direction. Then on Wednesday, attention turns to the delayed January jobs report, with nonfarm payrolls forecast to rise by 70,000 and the unemployment rate to remain at 4.4%. If the jobs data improves, the dollar could receive a cushion and withstand further losses—but if it weakens, the yen could strengthen further.
Source: Newsmaker.id
