The Japanese yen recoiled today after the selection of Sanae Takaichi as leader of the LDP and Prime Minister-in-waiting.
The market is sensing a fresh fiscal push and also the likelihood that she will lean on the Bank of Japan not to hike rates. With that, EUR/JPY has risen 290 pips today to the highest since the euro was unveiled in 1999. Using a synthetic euro, this would be the highest since 1992.
EURJPY monthly
The daily peak in the pair of 176.25 came midway through Asian trading but it hasn't retreated much, despite a couple dips down to 175.00.
The drop in the yen is good news for exporters but it's a worrisome sign for the economy of Japan in general, especially as Takaichi pushes for less immigration in a country in demographic crisis.
