There
were two sharp moves in Asia today:

the
yen fell with Japan’s ruling party losing its majority
oil
slid on Middle East de-escalation

Since
this is ForexLive, first to JPY.

USD/JPY
(and yen crosses) opened higher in the very early hours of trade here
in Asia. It was a holiday today in New Zealand, which is the very
first major FX centre to open each week. USD/JPY was above 153.00
very quickly, chopping around there for a few hours before making its
way above 153.85 where it has topped out, so far at least.

The
news of note was the Japanese election. In (very) brief:

233
seats in the lower house of the Diet are required to form a majority
Japan’s
ruling coalition lost its majority, with the latest I have seen
showing the
ruling LDP with its coalition partner Komeito on a combined
215
Most
likely now is that LDP/K will bring a third party into the coalition
and continue to govern

But
the yen has been hit due to

a
perception that policy normalisation may face political pressure to
proceed more slowly. Cost-of-living pressures in Japan are an
important political issue and its thought that a slowing of policy
normalisation (rate hikes) may be a price extracted by a third party
for agreement to support the LDP.
straight
up political instability until a new government is formed, and given
a 3-way agreement now required any government will have a higher
potential for instability

As
a reminder, Prime Minister Shigeru Ishiba dissolved the Lower House
only eight days after assuming office. Which seems was poor
judgement. Can he last?

The
lower yen played a role in Japanese stocks rising.

As
for oil, the Israeli strikes
on Iran targeted only military sites, sparing oil facilities, which
allowed Iran’s oil operations to remain unaffected. That’s the
very brief and simplified version of events, and very valid. Further,
there are reports that Iran’s air defence is now completely
compromised. Further still,
the demonstrated
stark reality
of the huge disparity between Israeli (Western-backed) capability and
Iran’s (Russia-backed) capabilities will also dissuade Iran from
escalation. Oil prices were slashed on a perception
that threats to supply have diminished. As I update Brent is under
USD72.50.

Elsewhere in FX moves have been subdued. As I post the USD is gaining a little. EUR, AUD, GBP, CAD, NZD – all a little lower against the big dollar. ——————

In
other market news:

Boeing
is said to be planning a US$15bn+ capital raising as soon as today.
The
People’s Bank of China launched a new monthly reverse repo facility
(see bullets above)

In
US election news:

The Trump campaign has faced a backlash from
high-profile Puerto Ricans and other Latins, due to a comment at
Trump’s New York rally from a warm up act calling Puerto Rico
“literally a floating island of garbage”. With the election so
close and the race so tight the risk of alienating a large swath of
voters (circa 5 million people of Puerto Rican origin live on the
mainland USA can vote) like this could be impactful.
Some Republican heavyweights have taken to social media to disavow the comments in a sign of how seriously this is being taken by those in the party with nous &/or in areas with a strong Latin presence.

See
bullets above for more on all of these.