Yen Extends Post-Election Rally on ‘Pain Trade’
The yen outperformed its G-10 peers and Japan’s super-long bonds rallied as Prime Minister Sanae Takaichi’s landslide election victory eased fiscal concerns. The dollar slipped for a fifth straight session.
USD/JPY fell 0.4% to 152.64. It dropped for the fourth straight day, its longest streak of losses since December. Japan’s 40-year yield dropped 10 basis points, retracing to levels seen in early January before snap election calls fueled spending concerns
The Bloomberg Dollar Spot Index fell 0.1% to near the lowest since Jan. 30. Data showed US payrolls rose by the most in more than a year and the unemployment rate fell unexpectedly in January.
“The fragility of the US dollar bounce on the upside surprise on non-farm payrolls was very telling” with the yen playing an outsized role in the greenback’s decline, said Sean Callow, a senior analyst at ITC Markets in Sydney.
“At this stage it still seems likely to be a post-Japan election pain trade rather than a desire to own the yen longer term”.
“But Japan’s Ministry of Finance can quietly ease back on its market monitoring for a while, after what looks like a significant tactical victory on USD/JPY starting with last month’s rate check by a friend”.
AUD/USD gained as much as 0.3% to 0.7147, the highest since Feb. 2023.
NZD/USD edged up 0.1% to 0.6056.
EUR/USD little changed at 1.1877.
GBP/USD added less than 0.1% to 1.3634.
Source : Bloomberg.com
