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On October 4th, Japans ruling Liberal Democratic Party held its presidential election. The new president will succeed Prime Minister Shigeru Ishiba, who has announced his resignation, and is expected to become the next prime minister. Japanese political scientist Norihiko Narita noted that with frequent presidential changes and the increasingly shaky foundations of the regime, the new LDP president will face multiple pressures. With both houses of the Diet shrinking, restoring political stability has become a core and pressing issue. Currently, Japan faces both the immediate challenge of high prices and the long-term challenges of population decline and economic recession. Furthermore, ensuring political stability is a crucial political issue. Therefore, Japans current political landscape is characterized by the coexistence of short-term and long-term challenges, the interweaving of social and political issues, and the continuous onset of numerous challenges.On October 4th, according to the Shanghai Railway Group, as the National Day and Mid-Autumn Festival holiday enters its midpoint, railway transportation in the Yangtze River Delta remains busy and operating at a high level. The group expects to handle 3.85 million passengers on October 4th, an increase of 146,000 passengers compared to the same period last year, a 3.9% increase. Since the start of the National Day and Mid-Autumn Festival holiday transportation on September 29th, the Yangtze River Delta railway has handled a total of 18.405 million passengers, with an average daily passenger volume of approximately 3.681 million, maintaining a strong holiday travel market.Voting for members of parliament in Japans Liberal Democratic Party presidential election has begun.On October 4th, Hongmeng Intelligent Driving announced that it had received 18,500 pre-orders for its entire lineup during the first three days of the National Day holiday (October 1st-3rd). Among them, 5,800 were for the Wenjie M7, 2,700 for the Zhijie R7, 2,100 for the Shangjie H5, and 1,500 for the Xiangjie S9T.On October 4th, local time, hundreds of protesters gathered outside a U.S. Immigration and Customs Enforcement (ICE) facility in Broadview, Illinois, a suburb of Chicago, clashing with law enforcement officers and resulting in multiple arrests. This follows numerous previous clashes between protesters and ICE officers in the area. Since the Trump administration took office, it has stepped up its crackdown on illegal immigrants. Protesters have repeatedly blocked vehicles transporting detainees to the ICE facility in Broadview. The U.S. government has responded by stating that it will not tolerate rioters using violence to prevent law enforcement.

The USD/JPY advances somewhat above 134.00 as negative sentiment and Fed worries combine with rising interest rates

Daniel Rogers

Feb 20, 2023 11:18

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USD/JPY establishes an intraday high towards the middle of 134.00 as it gains bids to reverse the previous day's decline from a multi-day high on Monday morning. In doing so, the Yen pair reflects the broad US Dollar gain amid fairly gloomy sentiment and the US and Canadian vacations.

 

Nonetheless, geopolitical concerns about China, North Korea, and Russia have recently weighed on market sentiment, despite the short calendar and absence of US/Canadian traders restraining momentum.

 

North Korea fired two ballistic missiles toward Japan over the weekend, reviving concerns that the hermit kingdom is up to something that could endanger the global economy. This is partly owing to the fact that both rockets were classified as tactical nuclear assault weapons.

 

In a similar vein, the most recent meeting between US Secretary of State Antony Blinken and China's top diplomat Wang Yi did not appear to have repaired US-China relations. Possible cause is a comment by a Chinese envoy that the United States must change course and restore the damage caused to Sino-American ties by the indiscriminate use of force. Ambassador Linda Thomas-Greenfield, US representative to the United Nations, declared on Sunday that China would cross a "red line" if it opted to provide lethal military aid to Russia for its invasion of Ukraine.

 

Meanwhile, better-than-expected readings of the US Consumer Price Index (CPI) and Retail Sales followed earlier positive readings of employment and output statistics and raised US Treasury bond yields and the US Dollar. The hawkish Federal Reserve (Fed) views and the aforementioned risk-negative factors may be comparable.

 

Fed Governor Michelle Bowman recently observed, as reported by Reuters, "We are observing an abundance of contradictory economic data." As reported by Reuters, Thomas Barkin, president of the Richmond Federal Reserve, claimed that they are detecting some inflationary progress due to the normalization of demand.

 

It should be underlined that the mixed leaning for the Bank of Japan’s (BoJ) new monetary policy board and chatters of more inflation in Japan likely to place a floor under the Yen.

 

Among these trades, the S&P 500 Futures print small losses even as Wall Street closed neutral. It’s worth noting that the US 10-year Treasury bond yields jumped to the highest levels since early November in the last week and helped the DXY to register a three-week advance.

 

For forward, Japan’s National Core Inflation figures will join the second reading of the US fourth quarter (Q4) Gross Domestic Product to steer immediate USD/JPY fluctuations. Yet, the most attention will be paid to the Federal Open Market Committee (FOMC) Meeting Minutes.

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