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I confirm my intention to proceed and enter this websiteThe yen dropped to a three-month low on Monday after Japan’s ruling coalition lost its parliamentary majority, leading investors to anticipate a slower pace of future interest rate hikes. Meanwhile, the dollar approached a monthly gain amid rising U.S. yields, with the yen hitting its weakest level since late July, trading at 153.3 in early-morning trade.
(USDJPY Daily Price Chart, Source: Trading View)
Prime Minister Shigeru Ishiba’s Liberal Democratic Party, which has governed Japan for nearly all its post-war period, lost its majority in the general election. This significant political shift could prompt a selloff in the yen and Japanese equities while pushing up Japanese Government Bond prices.
Ishiba’s Liberal Democratic Party and its coalition partner Komeito won only 209 of the 465 lower house seats, down from the previous 279, marking the coalition’s worst result since their brief loss of power in 2009.
A period of fractious coalition-building is likely to follow, with cost-of-living pressures high on the agenda. Traders expect that any new government will push the Bank of Japan to proceed cautiously with policy normalization. Consequently, the market sees a heightened risk of more dovish economic policies. The BOJ’s policy rate decision which scheduled on Wednesday could significantly influence market trends and investment sentiment for the remainder of the year.
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