The yen jumped to more than a two-month high on Monday on speculation that forex intervention could be imminent. The BOJ raised economic growth forecasts in last week's meeting.
Japan's December inflation data showed headline price growth coming in at 2.1%, its lowest since March 2022, but still running above the target of 2% for a 45th straight month.
Meanwhile, exports growth missed analysts' estimates, rising 5.1% year on year, as shipments to the US saw a double-digit decline. Exports the wider Asia region gained 10.2%, offsetting higher tariffs.
Takaichi had planned a record $783 billion budget for the next fiscal year, starting 1 April, on top of a $135 billion stimulus package last year targeted at helping households with the rising cost of living.
That sent government bond yields to multi-decade highs. Japan Securities Dealers Association showed that local insurers made the biggest net of 10-year bond sale since at least 2004.
While Takaichi's strong approval ratings points to an easy victory, the merger between the largest opposition party and a former ruling coalition partner increases the riskiness of her election gamble.
The yen easily strengthened above 50 SMA with few signs of a meaningful reversal. We expect the currency to rise beyond 154 per dollar within the week.
Asset recap
As of market close on 23 January, among EBC products, silver led gains. It climbed to the $100 mark, but analysts have said that makes sense in a world facing extreme geopolitical and economic uncertainty.
Microsoft shares jumped ahead of earnings report. Investors need more clarity on Azure's cloud growth and reassurance that AI spending has not eaten into profit margin.
Intel took a turn for the worse as it struggled to meet strong AI-driven demand for data-centre chips due to supply constraints. CFO David Zinsner said he expects available supply to improve in Q2.
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