07 Nov 2024

The US dollar is experiencing significant gains against major currencies following Donald Trump’s decisive victory in the presidential election. During the North American trading session, the USD/JPY pair is currently valued at 154.62, reflecting a substantial increase of 2.0% for the day.

Trump's Re-election as President  
Although numerous votes remain to be counted in the US election, it appears increasingly probable that Republican Donald Trump has secured re-election as President. Leading up to the election on Tuesday, Trump and Democrat Kamala Harris were in a tight race, raising concerns that the announcement of a winner could be delayed for days or even weeks, potentially resulting in extended uncertainty.

In a surprising turn of events for both parties, Trump achieved a decisive victory. This outcome is particularly advantageous for the Republicans, as they are poised to gain control of both the House of Representatives and the Senate. With Republican leadership, the implementation of Trump’s agenda in Congress is expected to proceed more smoothly. It is important to note that as of this writing, the vote tally remains incomplete, and Harris has yet to concede.

The US dollar has reacted to Trump's victory with significant gains, while the yen has experienced a notable decline. Trump's potential imposition of substantial tariffs on China, Europe, and Mexico could bolster the dollar, as such tariffs are likely to increase inflation and interest rates. Should Trump's policies incite trade conflicts, market sentiment may deteriorate, further enhancing the dollar's strength.

Today, the Bank of Japan published the minutes from its September meeting. During this meeting, the BoJ maintained interest rates at 0.25%, with Governor Ueda indicating that the bank would not hasten to raise rates amid market volatility. These remarks were made in response to a decline in the stock market following disappointing US employment reports, which raised concerns about a more rapid deterioration of the US economy than anticipated. However, these concerns were ultimately unfounded, and the markets do not foresee a BoJ rate increase before early 2025, although a significant drop in the yen could expedite such plans.

In terms of USD/JPY technical analysis, the pair has surpassed resistance levels at 151.86, 152.87, and 153.84, with the next resistance point identified at 153.95. Support is currently found at 150.78 and 149.77.