Lee Hardman, Senior Currency Analyst at MUFG, notes the impact of Japan's election risk on the Japanese Yen. The USD/JPY has risen above the 157.00-level, driven by expectations that the ruling coalition will strengthen its majority. This has led to renewed selling of the Yen, while a recent JGB auction showed stronger demand. Hardman notes that the political landscape is likely to support further selling of the Yen and JGBs.

Impact of Japan's election on currency

"Renewed yen selling was reinforced yesterday by the release of another opinion poll from Japan indicating that the ruling coalition government is well on course to strengthen their majority in the Lower House."

"The survey results have reinforced market expectations that Prime Minister Takaichi will win a strong mandate to continue implementing her 'reflationist' policy agenda providing a fresh catalyst for popular Takaichi trades encouraging further selling of the yen and JGBs."

"However, there was some good news for JGBs overnight. The latest 30-year JGB auction drew stronger demand."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

(This story was corrected on February 5 at 20:40 GMT to correct a mispelling in Prime Minister Sanae Takaichi's surname.)