Headlines:
- Yen losses ease up a little in European morning trade
- Japanese yen in the spotlight after weekend election
- Japan parliament reportedly to convene special session to vote on prime minister post
- Crude Oil Technical Analysis – Israel spares Iran’s energy facilities
- Weekly update on interest rate expectations
- ECB's Wunsch: It is premature to discuss December policy decision
- SNB total sight deposits w.e. 25 October CHF 457.4 bn vs CHF 462.3 bn prior
- UK October CBI retailing reported sales -6 vs 4 prior
Markets:
- EUR leads, JPY lags on the day
- European equities higher; S&P 500 futures up 0.5%
- US 10-year yields up 2.5 bps to 4.256%
- Gold down 0.6% to $2,731.59
- WTI crude down 5.7% to $67.65
- Bitcoin up 2.8% to $68,660
The main focus in FX was on the Japanese yen, as it opened with a striking gap lower after the weekend election.
Japan's ruling LDP party surrendered their outright majority in the lower house and that triggered some uncertainty on the BOJ's confidence to stick to policy normalisation. That as prime minister Ishiba's position is called into question following the election outcome.
USD/JPY opened with a gap up at 153.23 in Asia before holding around 153.50-60 levels in the handover to Europe. But as the dust settles, traders are slowly getting a grip on the situation that Japan's political landscape is still likely to remain as it is for the most part - at least for now.
That saw USD/JPY fall back to around 152.60 currently, eating into the opening gap higher but still up by 0.2% on the day.
Besides that, higher bond yields remain a focal point for broader markets. And that helped to underpin USD/JPY and the dollar as well. But yields did slide off a bit during the session, tempering with the dollar mood.
EUR/USD was keeping around 1.0790-00 mostly before nudging up slightly to 1.0815 now and still largely held back by its 200-hour moving average at 1.0825.
Besides that, other dollar pairs are more muted amid the mixed mood in markets to start the new week.
In the equities space, stocks are running higher as tensions in the Middle East abate following the developments over the weekend. That saw oil prices tumble lower by nearly 6% now and is breathing life into equities, with US futures set to run away with gains at the open later.
