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With not a lot of data to price in, Asian session traders focused on the Japanese election results and overall risk appetite.

  • New Zealand’s markets out on Labor Day holiday
  • Abe victory pushes Nikkei higher but drags on JPY

Major Events/Reports:

Shinzo Abe’s election victory

The biggest story of the hour is Japanese Prime Minister Shinzo Abe getting wide support in last weekend’s elections.

Local media are reporting that Abe’s Liberal Democratic Party (LDP) won nearly 80% of the lower house seats, which puts the party’s head honcho on track to secure his third three-year term and get the “longest-serving PM” record.

Word around the hood is that Abe is about to prioritize amending the constitution to legitimize Japan’s Self-Defence Force, which is an armed force that Japan maintains to “defend the peace” or defend its allies.

This could threaten Abe’s popularity since his proposal to divert some of the additional sales tax revenue from debt payment to child care and education (and not his views on the constitution) is what mostly won him the election.

For now, though, market players are happy enough to keep calm and carry on. For many analysts, Abe’s win means longer periods of easy monetary policy and a bias for weaker yen.

Mixed commodity prices

News of progress in the Trump administration’s tax reform continued to weigh on gold prices even as the dollar’s momentum has subsided.

Meanwhile, supply concerns in Iraq and less production in the U.S. boosted oil prices higher.

  • Gold is down by 0.22% to $1,277.72;
  • Brent crude oil is up by 0.16% to $57.84, and
  • U.S. crude oil prices is up by 0.41% to $52.05.

Major Market Mover(s):

JPY

The yen gapped lower at the start of the week thanks to DPJ’s weekend victory translating to longer periods of easy monetary policies.

USD/JPY jumped from 113.52 to 113.86 before settling at 113.76;
EUR/JPY popped up from 133.64 to 134.00 before falling to 133.89;
GBP/JPY rose from 149.67 to 150.16 before settling down to 150.12, and
AUD/JPY opened at 88.97 against its 88.71 close before capping mid-day trade at 88.97.

USD

The Greenback started the day on strong footing thanks to a jump in USD/JPY and extension of last week’s post-tax reform update gains, but overall risk appetite soon took over and pushed higher-yielding currencies ahead of the dollar.

EUR/USD fell to 1.1751 before rising back up to 1.1770;
GBP/USD dipped to 1.3169 before recovering to 1.3198;
AUD/USD .7801 before finishing at .7825, and
NZD/USD fell to .6931 before rising to .6966, and
USD/CAD popped up to 1.2642 before settling down to 1.2623.

Watch Out For:

  • 10:00 am GMT: German Bundesbank monthly report
  • 10:00 am GMT: U.K. CBI industrial order expectations (9 expected, 7 previous)