Summary
The LDP won a landslide victory in the Lower House election. Markets had already priced in much of the so-called Takaichi trade, reflecting pre-election polling and repeated warning rhetoric from Finance Minister Satsuki Katayama. Renewed yen weakness therefore failed to gain traction. The government's stance on monetary policy remains difficult to gauge. Policymakers have at times appeared to lean against further BOJ rate hikes, leaving uncertainty around the administration's true position on one of the key drivers of yen depreciation. The USD/JPY has consequently traded in wide ranges but without establishing a clear directional trend. We expect downward pressure on the yen to ease in March as monetary policy developments unfold and the prime minister visits the US.