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Win now and lose the future? Takaichi Sanae's absolute victory and the huge suspense of Japan's strategic isolation
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Hello everyone, today XM Forex will bring you "[XM Forex Platform]: Win now, lose the future? The absolute victory of Takaichi Sanae and the huge suspense of Japan's strategic isolation." Hope this helps you! The original content is as follows:
XM Foreign Exchange APP News - Takaichi Sanae's big gamble in early elections has finally won. The Japan Broadcasting Association predicts that the Liberal Democratic Party will win 274 to 328 seats in the 465-seat House of Representatives, while the centrist Reform Alliance can only maintain 37 to 91 seats. The gap between the two sides is significant. This will lead to Takaichi Sanae issuing decrees and even ignoring the collective opposition of the Senate and relying directly on the House of Representatives. The number of seats of the right-wing Reform Party increased from 2 to at least 5 seats, and the trend of right-wing forces in Japanese politics has further emerged. Sanae Takaichi used the sacrifice of two years of consumption tax and the tension of major power diplomacy as a bargaining chip to win the House of Representatives election. However, it was also accompanied by political risks caused by the deterioration of government debt and the lack of Senate constraints. Robert Pekanen, a political scientist at the University of Washington, www.xmtraders.commented: "This is a decisive victory for the Liberal Democratic Party, and it is a milestone victory for Sanae Takaichi's personal political career, but this victory itself is a high-risk political gamble." National defense and fiscal expansion: The clear shift in foreign and defense policies after Sanae Takaichi's victory became the core factor that impacted the yen exchange rate. The Associated Press reported that its core goals include lifting the arms export ban, breaking away from the traditional pacifist framework, and significantly increasing defense spending. This series of policies www.xmtraders.combined with the fiscal expansion plan directly pushed up expectations for Japanese government bond issuance. Richard Samuels, a professor at the Massachusetts Institute of Technology, pointed out that this victory has opened up ample room for policy implementation for Takaichi Sanae. “It will be able to promote the national security reforms long-term advocated by the Liberal Democratic Party and the Japan Restoration Council. It can also win wider public support for the fiscal expansion policy. The fiscal expansion policy is also a close interaction between Takaichi Sanae and Trump, adding external variables to the yen exchange rate. Trump’s ""Real Social" posted that "Japanese Prime Minister Takaichi Sanae has fully proven that he is a firm, courageous and wise leader, a ruler who truly loves his country" and mentioned that the United States and Japan are negotiating a sizable bilateral trade agreement. "This agreement will bring substantial economic and trade benefits to both countries." This move is considered to be Trump's endorsement of Takaichi Sanae's political actions. Takaichi Sanae responded, " "I am very honored to receive its recognition" and stated on the Thomas Berger said bluntly: "Takaichi Sanae has made a clear www.xmtraders.commitment to pursue a policy www.xmtraders.combination of fiscal expansion and tough national defense. This policy direction will directly affect Japan's fiscal situation and capital market. If global investors do not panic against the expansion of Japan's fiscal deficit, the Japanese economy may usher in a positive stimulus from fiscal policy, at least in the short term; but if there is a sell-off in the Japanese government bond market and the yen exchange rate weakens further, many of Takaichi Sanae's policy plans will face the risk of being stranded." Japan's current domestic policies have released some positive signals that are good for the yen. In an exclusive interview with NHK, Takaichi Sanae made it clear: "I think this cabinet is an excellent team with excellent execution capabilities. Although it has only been established for more than three months, the cabinet members have performed their duties and achieved tangible results, so there are no plans for reorganization at the moment." The stability of the cabinet ensures policy consistency and helps stabilize market confidence. At the same time, the reduction of consumption tax has become a core economic issue. Sanae Takaichi said: "Currently, most political parties support reducing consumption tax. The plan includes reducing food consumption tax to zero or 5%, or reducing it to 5% for all categories. The Liberal Democratic Party has also included it in the election platform. This is an overall issue related to economic recovery. I strongly call for the establishment of a special cross-party forum to speed up the discussion." If this policy is implemented, it will boost domestic consumption, improve economic fundamentals, and provide support for the Japanese yen exchange rate. However, we need to be vigilant that the reduction in consumption tax may lead to an annual fiscal revenue reduction of 5 trillion yen. If the funding gap cannot be properly filled, it will further aggravate fiscal deficit concerns and offset the positive effects. In summary, the full impact of the Japanese election will be gradually released in the next few weeks. The Japanese yen exchange rate trend needs to focus on three core directions: First, the pace of fiscal expansion and defense spending will directly determine the depreciation pressure on the Japanese yen; second, its economic growth trend and whether economic and trade frictions are alleviated are the key to improving Japan's economic fundamentals, which will affect the valuation of the Japanese yen. If easing meets GDP lower than expected, it will intensify the risk of Japanese yen depreciation. Third, the progress of the U.S.-Japan trade agreement negotiations and the performance of the government bond market. The former is related to the external support of the yen, while the latter is the core of the yen’s internal credit foundation. That is, if the issuance of government bonds does not meet expectations, it may cause the yield of government bonds to rise and worsen the cost of government debt issuance, which is a suppressive force for the yen. In addition, can the Takaichi Sanae government balanceThe coordination between fiscal expansion and sustainability, as well as the Bank of Japan's interest rate hike pace and fiscal policy, will ultimately determine whether the yen will escape its downturn or continue to weaken. The technical aspect is the same as predicted by last week's article. Takaichi Sanae's victory did not accelerate the depreciation of the yen. Instead, the yen went out of the bad cash market.
The above content is about "[XM Foreign Exchange Platform]: Win now, lose the future? The absolute victory of Takaichi Sanae and the huge suspense of Japan's strategic isolation." 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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