Japanese Yen Surge After Ishiba Wins PM Contest

Fundamental Analysis

* Ishiba Wave: The Japanese Yen surged against the US Dollar after former Defense Chief Shigeru Ishiba won the Liberal Democratic Party’s (LDP) presidential election, securing his position as Japan’s next prime minister. Market participants view Ishiba’s victory as supportive of potential interest rate hikes by the Bank of Japan (BoJ). In previous comments to Reuters, Ishiba endorsed the central bank’s current policy, stating it was “on the right track” with its rate hikes. Besides that, a sharp weakness in the US Dollar (USD) after the release of the softer-than-expected United States (US) Personal Consumption Expenditure Price Index (PCE) data for August has also prompted further demand for the Yen. Annual PCE inflation decelerated to 2.2%, faster than estimates of 2.3% and the July’s reading of 2.5%

Technical Analysis

* Technical Breakout: USDJPY was traded lower while currently testing near the support level 142.150. MACD which illustrate strong bearish momentum signal suggest the pair to likely further extend its losses after it breaks below the level.

*Resistance and Support: If the bearish momentum persists, there’s a strong likelihood that the price will potentially head towards the support level 139.750 after it breach below the level. Conversely, a potential reversal is also to be expected and the price could head back towards 144.60.

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Potential Risks

Looking ahead, investors are now look to the release of key U.S data this week such as ISM Manufacturing PMI, ADP Non-Farm Employment Change and Nonfarm Payrolls for further impetus.

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Monitoring

Stay updated on US and New Zealand data, central bank updates and any shifts in the US Dollar’s strength by following PU Prime’s market insights and daily financial news.

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Disclaimer: Trading derivatives involves high risks, and market conditions can change rapidly. The content is for informational purposes only and should not be considered as financial advice. Traders should conduct their own research and consider risk management strategies.