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market analysis
Early election finalized, Takaichi Sanae's political gamble
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: Early election finalized, high market Sanae's political gamble". Hope this helps you! The original content is as follows:
The next House of Representatives election was originally scheduled to be held in October 2028, but Takaichi hopes to use its high support rate to reverse the unfavorable situation of the Liberal Democratic Party in recent elections.
When Takaichi Sanae announced an early election, he clearly mentioned "dissolving the House of Representatives" and finalizing the voting day for House members. The core purpose was to consolidate the ruling coalition's majority advantage in the House of Representatives by re-electing House members - after all, core powers such as prime minister appointment and budget review are dominated by the House of Representatives.
Takaichi Sanae had a firm attitude at the press conference: "I bet my career as Prime Minister on this election, and I hope that the people will directly decide whether they are willing to entrust me with the power to govern the country."
His core appeal is very clear: take advantage of the current high personal support rate to lock in political authorization and clear obstacles for the implementation of subsequent policies.
Popularity split: the contrast between high support rate and weak governing foundation
Takaichi Sanae's personal appeal is at a historical level, and multiple polls have given strong confirmation: a survey by Japanese public broadcaster NHK showed that his support rate reached 62%, a poll by Nippon News Network was as high as 78.1%, and the support rate reported by Nikkei Shimbun also reached 75%.
However, in sharp contrast, the support rate of the Liberal Democratic Party she leads is only 29.7%. The embarrassing pattern of "people are popular but the party is not popular" highlights the significant disconnect between voters' personal recognition of the prime minister and their support for the ruling party.
The Liberal Democratic Party and its former coalition partner Komeito lost their majority in the House of Representatives in October 2024 and in the Senate in July 2025, forcing Takaichi to form a fragile alliance with the Japan Reform Party, which holds similar conservative views.
What’s even more serious is that, the Liberal Democratic Party and its alliance partner, Japan Reform Association, occupy a total of 233 seats in the 465-seat House of Representatives. They only rely on the support of three non-party members to maintain a majority with a one-vote advantage. The ruling foundation is extremely weak.
Under internal and external pressure: risks and games behind the election
The game risks of this early election have further increased due to the www.xmtraders.complexity of the internal and external environment.
At the internal level, the opposition parties have www.xmtraders.completed the integration of forces and formed a unified confrontation camp.
The Liberal Democratic Party faces scrutiny over political funding scandals and rising prices. An NHK poll showed that 45% of respondents were most concerned about price issues, and 16% were concerned about diplomacy and national security.
The opposition parties will criticize Takaichi for dissolving the House of Representatives and holding elections in a short period of time, arguing that she was motivated by the Liberal Democratic Party and personal interests.
On January 16, Japan’s largest opposition party, the Cadet Party, and the Komeito Party, the Liberal Democratic Party’s former alliance partner for 26 years, officially merged to form the “Centrist Reform Alliance.” It currently controls a total of 172 seats in the House of Representatives, which is enough to www.xmtraders.compete with the ruling alliance and adds huge variables to the election.
On the external level, against the background of the cooling of Sino-Japanese relations, Takaichi Sanae may meet with US President Trump as early as March. The outcome of this meeting will directly affect Japan's diplomatic trend and thus affect people's livelihood and public opinion.
Domestic Political and Social Challenges
The further shift to the right and conservatism of mainstream politics, coupled with an active fiscal policy based on government debt, has raised questions about whether Japan can resist the politicization of populism.
Gaoshi’s high support rate reflects voters’ expectations of his leadership, rather than an evaluation of his governance performance. The durability of his government still needs to be tested by the market and the public.
The Alliance of Backbone Democracies
Takaichi plans to promote "backbone democracy diplomacy" and establish alliances with European countries and middle powers such as South Korea.
On January 13, 2026, South Korean President Lee Jae-myung will visit Japan. The G7 and NATO summits will be held in the next few months. Takaichi hopes to use these occasions to advance his diplomatic agenda.
However, the foundation for improving relations between Japan and South Korea is not yet solid, and the backbone democracies often take ambiguous positions on major global issues, and their declared www.xmtraders.common values appear fragile.
Election Game: Dual Predictions of Optimism and Caution
For this high-stakes election, the analysis www.xmtraders.community has shown www.xmtraders.completely different predictions.
Sam Joachim, an economist at Swiss private bank EFG, bluntly said that this is "a high-risk game": "Her personal support rate is extremely high, but the Liberal Democratic Party's own support rate is weak, and facing a united opposition camp, electoral uncertainty has increased significantly."
Oxford Economics Norihiro Yamaguchi, the chief Japanese economist at the institute, is also cautious. He pointed out that the Komeito Party has a deep accumulation in grassroots organization mobilization and constituency resource integration. The Liberal Democratic Party has relied on its support for many previous election victories. Now that it loses this ally, a large number of Liberal Democratic Party candidates may become passive in the constituency www.xmtraders.competition.
However, some analysts are optimistic. Monex Group expert director Jesper Cole said that Takaichi Sanae's personal characteristics of "starting from scratch and rising to the top against the trend" - www.xmtraders.coming from an ordinary working-class family, without financial endorsement and prominent family background, reaching the top of power through hard work and perseverance alone, have a strong "motivating effect" on the Japanese people, especially the young group, who are tired of traditional politics.
He believes that the decisive factor in this election will be Sanae Takaichi's personal charisma, rather than the LDP's economic policies, and this factor may push the LDP to a landslide victory.
Summary and technical analysis:
For Japanese yen traders, the election results will become the core variable in reshaping the trading logic: if the Liberal Democratic Party successfully expands its majority in parliament, Gao Shi’s status within the Liberal Democratic Party will be significantly improved and the conservative policy will be accelerated. The Japanese yen will fluctuate in loose fiscal expectations and tight monetary policy.
The election victory will consolidate the conservative ruling alliance between the Liberal Democratic Party and the Japan Reform Association and lay the foundation for future constitutional revision. Takaichi hopes to consolidate the domestic political foundation through the election and show the United States his image as a long-term leader, similar to Shinzo Abe 2.0.
If the opposition party wins, or the ruling coalition still maintains a slim majority, policy uncertainty will intensify market risk aversion, which may trigger sharp short-term fluctuations in the yen exchange rate, but this is a small probability event.
In terms of trend, even though the U.S. dollar index has recorded a sharp decline in the past two trading days, the yen still has not appreciated significantly, which means that the pressure for depreciation of the yen is still very high. Sanae Takaichi announced an early election during the period of high popularity as a positive move to maintain his governance philosophy. This behavior strengthened the expectation of yen depreciation. However, subject to the Japanese government's two-day window guidance, the yen tends to fluctuate near the 160 mark.
Technically, the USD/JPY is back to the breakthrough level of 157.89, running in the ascending channel, and is in the strong range of the channel, above the middle track.
The Japanese yen is expected to continue to move in the direction of depreciation relying on the ascending channel. The support is at the mid-rail, that is, the dotted line, and then near 156.52 below.
The above content is all about "[XM Foreign Exchange Platform]: Early election finalized, high market Sanae's political gamble". It was carefully www.xmtraders.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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