The U.S. dollar was ahead of its Japanese counterpart on Monday’s opening bell. However, the triumph of a ruling party in Japan’s election somehow prevented the yen from further declining.
The greenback rose as high as 0.45 percent against the Japanese yen at 114.05. It notched its best level since July 11 on the previous session. The U.S. currency was undermined by the good performance of Treasury yields as it hits a nine-year high. Yields were supported after analysts saw signs of progress in U.S. President Donald Trump’s pledged tax reform, which also showed possibilities that the government is picking up inflation.
The outcome of the Japanese election gave the U.S. dollar an extra lift, regardless of the progress on tax reform. According to the media, the ruling party of Japanese Prime Minister Shinzo Abe won the election on Sunday. His coalition kept almost two-thirds “super majority” in the lower house.
The triumph of Shinzo Abe has somehow diminished concerns that his steps on the nation’s economy would be disrupted and might stop their currency on falling against the U.S. dollar. One of his implementations was the monetary stimulus of the Bank of Japan.
Daiwa Securities’ senior currency strategist Yukio Ishizuki said that the victory of LDP was expected, but helped eased the concerns that had been limiting the market participants from buying the U.S. currency. Ishizuki added the overcoming deflation is at the essence of Abe’s administration and the assurance of its continuation is still indefinite.