CNH: USD/CNH Implied Vols Continue To Decline, LPRs Seen Steady Today
Very low volatility persists for the yuan. USD/CNH sits near 7.1875 in early Wednesday dealings, aft...
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ASIA: Coming Up In Monday's Asia Pac Session
| 2345BST | 0645HKT | 0845AEST | New Zealand Q2 CPI |
| 0001BST | 0701HKT | 0901AEST | UK July Rightmove House Prices |
| 0100BST | 0800HKT | 1000AEST | South Korea First 20days July Trade Data |
| 0200BST | 0900HKT | 1100AEST | China 1yr & 5yr Loan Prime Rates |
Source: Bloomberg Finance L.P./MNI
JPY: USD/JPY Lower In Aftermath Of Election Result
The knee jerk reaction from USD/JPY has been to fall in the first part of Monday trade. After ending last week at 148.81, the pair fell to 147.79 in the first part of trade before stabilizing somewhat. We were last near 148.00. The ruling coalition was expected to lose its majority from the weekend upper house elections, so the outcome may be driving a buy the rumour, sell the fact type market reaction. Still, greater uncertainty in terms of the local outlook, particularly in terms of fiscal spending, with minor parties calling for greater cost of living relief, could weigh on JPY in the medium term. Note Japan onshore markets are closed today.
Note the following levels for USD/JPY from a technical standpoint:
RES 4: 151.21 High Mar 28
RES 3: 150.49 High Apr 2
RES 2: 149.38 50.0% retracement of the Jan 10 - Apr 22 bear leg
RES 1: 149.18 High Jul 16
SUP 1: 146.92 Low Jul 16
SUP 2: 146.31 20-day EMA
SUP 3: 145.66 50-day EMA
SUP 4: 144.23 Low Jul 7
JAPAN: LDP Ruling Coalition Loses Upper House Majority, Ishiba Vows To Stay On
Various media outlets are reporting that the ruling LDP coalition has lost control of the upper house following Sunday's election result. Whilst opinion polls pointed to this result, it brings a new period of political uncertainty to Japan, with focus in terms of what it means for the fiscal outlook. Opposition parties have been calling for more cost of living relief via tax cuts, which the ruling coalition has pushed back on so far.
- Bloomberg noted: "The ruling Liberal Democratic Party along with longtime partner Komeito lost its majority in the chamber, public broadcaster NHK reported, saying the bloc failed to win the 50 seats it needed to maintain control. That marks the first time since 1955 that a leader from the storied Japanese party will govern the country without a majority in at least one of the legislative bodies." (See this link).
- Incumbent PM Ishiba vowed to stay on though: "“I continue to have a number of duties I must fulfill for the nation, including achieving wage growth that exceeds inflation, achieving gross domestic product of a quadrillion yen, and responding to an increasingly tense security environment,” Ishiba said. “Though the votes are still being counted, we do seem to have won the most number of seats out of the parties.” (via BBG).
