The Japanese Yen gains on threat of intervention as Japan gets its strongest government in decades, with PM Takaichi securing total control of the Japanese government.
- Eyes are on Japan as this week begins, following a snap election held yesterday for the lower house of the Japanese Parliament. The ruling LDP led by new PM Takaichi won a 2/3rds majority in the lower house, which is sufficient to override decisions made in the upper house, effectively giving the executive branch full control. The Japanese Yen is in a long-term bearish trend and was initially sold further as the election results emerged, but Japan's top currency diplomat Mimura made a minor threat to intervene to prop up the Yen, which sent the currency a bit higher. As the Tokyo close approached, the benchmark USD/JPY currency pair was trading lower at ¥156.50. The Nikkei 225 Index is up to a new record high, more than 3.5% higher on the day.
- Risky assets are mostly gaining as the new week gets underway, although most major US equity indices are still off their highs, except the Dow Jones Industrial Average which broke 50,000 last Friday while making a very strong rise. Trend traders will be interested in being long there. Precious metals are also in focus, with Gold standing out as it gained to trade above its recent 50% retracement level at $5,005. If the price holds up above that level, it could mean a bullish outlook for Gold.
- President Trump has talked up last Friday's talks between the USA and Iran, with a second round due in a few days. However, Trump is briefing that he expects more on the table from the Iranians during the next round. The prediction market Polymarket is pricing in a probably US strike on Iran in April or May.
- In the Forex market, since today's Tokyo open, the strongest major currency has been the Japanese Yen, while the weakest has been the British Pound, putting the GBP/JPY currency cross into focus. The Yen's relative strength is due to the low-key intervention threat. The pair I see most suitable for day trading today is the AUD/USD on the long side.