Citi Discusses USD/JPY Outlook Amid LDP Election Uncertainty By Investing.com

Citi released a statement addressing the potential outcome of Japan’s Liberal Democratic Party (LDP) presidential election and its impact on the currency pair.

The financial services company noted the difficulty of predicting the election’s influence on the exchange rate due to the congested nature of the race.

According to Citi, the main risks for the USDJPY pair depend on the winner of the election. If Sanae Takaichi wins, it could be seen as a negative for the Bank of Japan’s monetary policy normalization, which could lead to a weaker Japanese yen.

Conversely, a victory for Shigeru Ishiba could signal a departure from Abenomics-style policies, potentially strengthening the yen.

Despite the uncertainties, Citi’s outlook for USD/JPY remains unchanged. The firm anticipates that the currency pair will not fall below ¥140/$ until next year. However, there is also the possibility of a return to a range between ¥151/$155 and ¥155/$155 before then.

Citi stressed that while risks are tilted to the downside for USD/JPY, it does not expect a significant departure from their current scenario.

This outlook suggests a level of stability in the currency pair despite the political variables at play. Citi’s analysis points to a close eye on the outcome of the election, given its potential implications for currency market dynamics.

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