So Far So Good for the Takaichi Gamble

The report highlights the Yen's initial positive reaction to PM Takaichi's election victory and warns of overextended long positions in EUR/USD. Meanwhile, GBP weakens as markets price in more aggressive BOE rate cuts.

Key Takeaways

• 1.Japanese PM Sanae Takaichi secured a two-thirds majority, supporting pro-growth policies, though JPY stability remains tied to bond market calmness.
• 2.EUR/USD long positioning has reached historical peak levels, suggesting potential exhaustion despite supportive economic data.
• 3.GBP is facing downward pressure as markets increase bets on BOE easing in March to 18bp, up from 5bp a week ago.

Table of Contents

• Monday morning FX moves are a notoriously unreliable indicator
• Futures position in USD/JPY are flat - it's all about carry
• EUR/USD longs, by contrast, are stretched.
• ANALYST CERTIFICATION
• MA02MAR DISCLAIMER
• CONFLICTS OF INTEREST
• Important Notice
• Other Material Conflicts
• Important Disclaimers

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