USDJPY dropped following the announcement of Prime Minister Abe’s resignation last Friday. Although the decline in USDJPY was limited compared to the scale of Nikkei Average drop, since higher US yields catalyzed Japanese investor buying of foreign bonds, thus supporting USDJPY downside. Political risk will only increase through mid-September. Not only USDJPY and JPY rates, but also the Nikkei Average will be prone to these risks, and Japanese investment flows are likely to stay active.
In this episode, Takahiro Sekido, Chief Japan Strategist of Global Markets Research, MUFG Bank Tokyo discusses the impact of Abe’s resignation on markets and cross-border flows as well as updates of his view on the Yen, Yen rates, and Dollar/Yen cross-currency basis.
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