The Japanese Yen struggles to find demand to start the week as markets assess the outcome of the Japanese general election.
Japan’s Liberal Democratic Party, which has been in power since 1955, lost its majority for the first time in 15 years in Sunday’s national election, prompting concerns about the world’s fourth-largest economy and the uncertainty over the make-up of the next government.
According to NHK, the ruling Liberal Democratic Party and its coalition partner Komeito won just 215 of the lower house’s 465 seats, falling short of the 233 required for a majority. The main opposition, the Constitutional Democratic Party of Japan (CDPJ) won 148 seats, a significant increase from 98.
USDJPY started the week with a bullish gap following this development and touched its highest level in nearly three months near 154.00. The pair was trading slightly below 153.50, rising about 0.7% on the day.
Highlighting the selling pressure surrounding the Japanese Yen, the EURJPY cross was last seen gaining more than 0.6% at 165.50 and GBPJPY was up 0.7% at 198.70.
The Federal Reserve Bank of Dallas’ Texas Manufacturing Business Index for October will be the only data featured in the US economic docket. Later in the American session, the US Treasury will hold 2-year and 5-year note auctions.
Following last Thursday’s correction, the DXY Dollar Index regained its traction and closed in positive territory on Friday, gaining more than 0.8% for the week. Early Monday, the index edged higher toward 104.50. Meanwhile, US stock index futures are trading in positive territory, reflecting an improving risk mood.
EURUSD extended its downtrend on Friday and registered losses for the fourth consecutive week. The pair trades in a tight range near 1.0800 in European trading on Monday.
GBPUSD lost its recovery momentum on Friday and ended the week marginally lower. The pair remains in a consolidation phase at around 1.2950 to begin the European session.
Gold gathered bullish momentum and posted daily gains after falling below $2,720 on Friday. XAUUSD struggles to gather directional momentum and moves sideways below $2,750 early Monday.
(Source: OANDA)
