Institutional Insights: Credit Agricole JPY Election Scenarios
JPY: Japan election scenarios
The current Lower House election offers some rare excitement for the JPY as it will act as a barometer of new PM Shigeru Ishiba’s ability to shake off LDP factional resistance to any move away from Abenomics.
The most likely outcome (60% odds) is that the LDP will lose its singleparty majority and have to rely on Komeito to form a coalition government, which would signal a slow move away from Abenomics and have little effect on the JPY. This is the expected outcome of the market. The next likely outcome (20%) is the LDP holding onto its single-party majority, leading to an accelerated move away from Abenomics, which would be positive for the JPY.
A weak election result for the LDP (15%), ie, the LDP holding onto power only via a multiparty coalition, could lead to a shift back towards Abenomics, leading to weakening in the JPY. The strongest outcome for the JPY would be political uncertainty and a shift away from Abenomics that would be generated by a victory by the Constitutional Democratic Party of Japan. We place only a 5% probability on this outcome.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!