Japan poised to swear in a new PM as GBPJPY approaches key support

Overnight, Japan’s Liberal Democratic Party (LDP) voted former foreign minister Fumio Kishida as its new leader, and Kishida is now expected to be sworn in as Prime Minister next week. As my colleague Tony Sycamore noted in his article during today’s Asian session, “Kishida is a moderate, and … he is viewed as the safest choice by party members.”

Reuters describes Kishida as a “soft-spoken consensus-builder…with a bland image,” but he clearly enjoys the support of establishment LDP politicians and may be seen by the populace as an upgrade over former PM Yoshihide Suga, who only lasted a year in office. In his first news conference, Kishida focused on wealth inequality, noting that the country “can't achieve strong growth if wealth is concentrated in the hands of a small group of people.” Accordingly, Kishida proposed a ¥30T ($270B USD) spending package, signaling that he supports continued expansionary fiscal policy to stimulate economic growth in the island nation.

FX traders seem cautiously optimistic on Kishida’s potential impact on the yen, which is the second-strongest major currency so far today, behind only the US dollar (for more on the move in the greenback, see my colleague Joe Perry’s note from earlier this morning!). USD/JPY is therefore edging higher on the day, but we wanted to key in GBP/JPY, which is approaching a key support level as we go to press.

With sterling continuing to struggle amidst the ongoing energy shortage, GBP/JPY is approaching the bottom of its three-month range, and its lowest level in seven months near 149.00; with the rising 200-day EMA coming in around 149.30, this support level will be absolutely crucial.

Source: TradingView, StoneX

Given how quickly the pair rallied from 140.00 to 150.00 in Q1 (leaving few notable areas of support or resistance), a confirmed break below 1.4900 would open the door for a continuation down into the mid-140s in short order. Of course, if bulls are able to defend that support level, GBP/JPY could bounce back toward the top of the range around 153.00 as we move through October as well.

With another Japanese election scheduled for November, yen traders will undoubtedly want to familiarize themselves with how the island nation’s political winds are blowing moving forward!

How to trade with City Index

You can trade easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.