Yen Strengthening! Exploring Market Movements After Ishiba's Election and Opportunities to Sell the Dollar

Yen Strengthening! Exploring Market Movements After Ishiba's Election and Opportunities to Sell the Dollar

From September 23 to September 27, I achieved a total profit of +110,196 USD through careful trading focused on selling the dollar, accumulating gains throughout the week.

Sharp Decline and Caution Against Rebound Following Ishiba's Election

In the early part of the week, significant yen selling occurred due to comments from Bank of Japan Governor Ueda and expectations of Takaichi winning the LDP presidential election, causing USD/JPY to surge to the 146 yen level. However, unexpected market movements occurred following Ishiba's election. Given the differing stances on monetary policy between Ishiba and Takaichi, the yen strengthened by over 4 yen.

Cautious about a rebound immediately after the sharp decline, I executed careful, small trades, ultimately securing stable profits. As Ishiba's comments may continue to unsettle the market, ongoing vigilance is necessary.

Future Focus Points

1. Fluctuations in the Yen Exchange Rate
   In the New York foreign exchange market on the 27th, the yen strengthened, with the exchange rate reaching around 142 yen per dollar. Ishiba's election in the LDP presidential race has led to expectations of a rate hike from the Bank of Japan, driving yen buying. This is a stark reversal from the previous day's yen selling, which favored Takaichi.

In the New York market, expectations for continued Fed rate cuts have intensified movements to sell dollars and buy yen, further pushing the exchange rate down to the early 142 yen range.

2. Declining U.S. 10-Year Treasury Yield and PCE Deflator
   The August PCE deflator was released, indicating a cooling of inflation. This has further strengthened expectations for Fed rate cuts, although there is debate about whether another significant rate cut will occur within the year. I plan to continue with a selling perspective on the U.S. dollar.

Currency Outlook

• U.S. Dollar (USD): Neutral
  There are discrepancies between Fed and market rate cut predictions, with sensitive reactions to U.S. economic data. Changes are likely depending on upcoming data, maintaining a neutral stance.

• Japanese Yen (JPY): Neutral
  Continued market focus on political conditions and monetary policy is expected to lead to instability. Ishiba's comments and China's economic trends will influence the outlook, maintaining a neutral stance.

• Euro (EUR): Neutral
  Strong uncertainty surrounding ECB monetary policy, with movements likely influenced by U.S. indicators, leads to a neutral outlook.

• Australian Dollar (AUD): Buy
  The hawkish stance of the RBA and interest rate advantages continue to support a buying direction for the Australian dollar.

• South African Rand (ZAR): Buy
  The weakening of inflation and expectations for a unity government support the rand, leading to a buying direction.

• British Pound (GBP): Neutral
  The Bank of England's policies and political uncertainty are expected to cap upward movement, keeping the pound neutral.

• Canadian Dollar (CAD): Neutral
  The pace of easing by the Bank of Canada and the influence of oil prices result in a neutral stance for the Canadian dollar.