(Bloomberg):The yen is expected to rise next week. Following the victory of former Liberal Democratic Party Secretary-General Shigeru Ishiba in the Liberal Democratic Party presidential election, yen buying is likely to prevail as the Bank of Japan is expected to maintain its policy of raising interest rates. On the other hand, there is a view that the U.S. economy is solid and that the downside of the dollar will be limited.

Views of market participants

◎Akira Moroga Chief Market Strategist at Aozora Bank

  • Following Mr. Ishiba’s victory, the decline in yen interest rates, the rise in stock prices, and the fall in the yen’s depreciation and dollar strength are likely to advance. However, expectations for interest rate cuts in the U.S. have been priced in a bit too much, and the dollar is expected to gradually become firmer.
  • The dollar/yen rate is assumed to be in the range of 142 to 148 yen. It is unlikely that the stock will break below the range due to the presidential election alone. There are hopes for a slight recovery in China due to economic stimulus measures, and there is a possibility that the dollar will be more likely to be bought on a risk-on basis.
  • In Japan’s political situation, dissolution and general elections are attracting attention. If you win the election, you’ll be risk-on, but if it’s doubtful whether you’ll win, you’ll have to wait and see.

◎Takashi Ueno, Senior Economist, Nissay Research Institute

  • With Ishiba’s victory, the Bank of Japan’s gradual interest rate hike stance will be maintained, and the yen will continue to appreciate.
  • Important economic statistics will be released in the United States. If the economic strength is confirmed, the overpricing of interest rate cuts will be corrected, and the dollar will likely remain strong.
  • The focus will be on the employment data, and until it is announced, major price movements will be suppressed, and the downside of the dollar will remain firm.

Next week’s highlights

  • 1st: Bank of Japan’s short-term economic observation survey on enterprises (Tankan, September survey)
  • 4th: September US employment statistics

Main plans for next week

  • 30th: US Federal Reserve Chairman Jerome Powell speaks at the National Association of Business Economists (NABE)
  • 30th: European Central Bank (ECB) President Lagarde speaks at the European Parliament
  • 30th: Bank of Japan plans to purchase government bonds from October to December
  • 1st: September U.S. ISM manufacturing industry index
  • 3rd: Bank of Japan Councilor Akira Noguchi gave a speech and held a press conference at the Nagasaki Prefecture Financial and Economic Council.
  • 3rd: September U.S. ISM non-manufacturing industry index

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