Japanese Prime Minister Shinzo Abe secured a two-thirds ‘super majority’ on Sunday, claiming 312 out of 465 possible seats. Abe’s victory essentially ensures that his easy-monetary policy (dubbed Abenomics) will continue, a prospect which sent the dollar to a three-month high against the yen.
The dollar had started gaining on Friday after the U.S. Senate approved a budget plan for the 2018 fiscal year, a task that had been a huge challenge for Republicans thus far. The dollar hit as high as 114.10 yen on Monday morning, its highest since July 11, before retreating slightly. It was trading at 113.69 yen as of 1:55 p.m. HK/SIN, a 0.17 percent increase.
The currency markets were also pushed by continuing political struggle in Europe which pushed the common currency lower on Monday, on the heels of a 0.6 percent slide on Friday. The euro was down 0.10 percent against the dollar, trading at $1.1775. The euro has lately been under pressure as traders have been hoping for the European Central Bank to implement more hawkish policy. The next ECB meeting will be held this coming Thursday.
Stock Markets React to Election
Prior to the election Japan’s Nikkei 225 index posted gains for 14 straight sessions. It was up 1.16 percent on Monday after the election results were in. Other Asian markets were also broadly higher on Monday, with South Korea’s Kospi posting a modest 0.02 percent gain and the Shanghai Composite rising 0.11 percent. Australia’s ASX 200 was down, easing 0.22 percent while Hong Kong’s Hang Seng Index erased 0.67 percent after property, gaming and oil stocks fell.