Trump Trade & Japan Politics Push USDJPY Higher

Trump Trade & Japan Politics Push USDJPY Higher

Japan's ruling coalition losing its parliamentary majority in weekend elections is currently weighing on the Japanese yen.

Adding momentum to the dollar's strength, long-term U.S. Treasury yields continued their surge, despite the Federal Reserve’s recent 50-basis-point rate cut. Traders perhaps now see little chance of a rate cuts when the Fed meets on November 6, just a day after the U.S. election.

Another key factor in the dollar’s rise is what’s being called the “Trump Trade” — a bet on Donald Trump's potential re-election. Should Trump secure victory and the Republicans retain control of Congress, his policies are expected to drive up the U.S. deficit and reignite inflation.