Following the formal agreement of the coalition government, the USD/JPY extended its slight rise.

【10/20Market Overview

During Tokyo time, as expectations rise that the Liberal Democratic Party and Nippon Ishin no Kai will reach policy agreement in talks, the Nikkei 225 rose sharply, reviving the Takai trade, and the USD/JPY rose to151.20yen. Afterward, following hawkish remarks such as Takata Bank of Japan Policy Board member saying “there is a risk that prices may rise more than expected” and “communication should be conducted on the premise that the price target has largely been achieved,” the USD/JPY fell to150.52yen. In European hours, reports said the Bank of Japan would discuss at next week’s29－30Fed? meeting the outlook for economic and price conditions (Outlook for Economic and Price Developments) and the potential to raise the estimate for real GDP for this year, and the USD/JPY fell to150.27yen. After positions were unwound, the LDP and Nippon Ishin no Kai formally agreed to form a coalition government, and the USD/JPY recovered to150.86yen. In New York time, with no new catalysts, USD/JPY remained range-bound in the upper 150s.NYTime,150yen levels showed little movement.

【10/21Market View