Summary
Yen selling re-emerged after a surprise snap election was called in Japan, pushing the USD/JPY above 159 and beyond last year's high. However, the move reversed as talk grew of coordinated action by Japanese and US authorities, driving the pair down to around 152 at one point. The election outlook remains highly fluid and the subsequent political trajectory is extremely uncertain, making it difficult to conclude that the yen-selling phase has definitively turned. That said, indications suggest the US has also urged greater restraint on fiscal policy, raising the possibility that fiscal policy becomes increasingly cautious. We see this, together with the prospect of the BOJ bringing forward its next rate hike, as laying the groundwork for a trend toward restraining further yen weakness.