Precise Investors Editorial Team
The yen eased 0.3% to 153.15 after jumping almost 3% last week – its biggest weekly jump in nearly 15 months
The yen dropped on Monday after strong gains last week on easing fiscal worries.
Liquidity is likely to be thin with markets in China, Taiwan and South Korea closed for holidays.
The yen eased 0.3% to 153.15 per U.S. dollar on Monday after jumping almost 3% last week – its biggest weekly jump in nearly 15 months – after Prime Minister Sanae Takaichi’s Liberal Democratic Party won a landslide election victory.
Bank of Japan Governor Kazuo Ueda and Takaichi will hold their first bilateral meeting since the election later on Monday to discuss the economy and monetary policy.
While many thought a supermajority for her LDP party would be negative for Japanese bonds and the yen, the exact opposite happened: They both rallied, said Brent Donnelly, a currency trader and founder of analytics firm Spectra Markets.
The removal of uncertainty has encouraged long-term investors to dip their toes back in the water. With a bit of stability, those juicier Japanese yields are attracting plenty of interest. So are the Nikkei and the yen, he said. It’s called the ‘Buy Japan’ trade.
Data on Monday though detailed some of the challenges facing Takaichi and her government with the economy barely growing last quarter, eking out an annualised 0.2% expansion.
That may complicate the path for Bank of Japan tightening.
The BOJ next meets on rates in March, with traders ascribing 20% odds for a hike.
The BOJ lifted the key rate to a 30-year high of 0.75% in December, although that remains well below some other economies, leading to significant yen underperformance that triggered direct intervention to support yen over the past few years.
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