From Marc Chandler at Bannockburn Global Forex:
There are three important developments. First, Japan’s Prime Minister Takaichi led the LDP to a landslide victory that secured a 2/3 “super majority” that is understood as a powerful mandate and provides an opportunity to change the constitution. While JGBs were sold and Japanese equities bought, after some initial volatility, as many anticipated, the yen has defied expectations and strengthened. Second, Chinese officials have recently moved to discourage financial institutions from buying more Treasuries. Apparently, it was justified on risk-management grounds rather than geopolitics. And it may be begun in recent weeks rather than the past couple of days. Third, UK Prime Minister Starmer’s chief of staff resigned over the Mandelson appointment, but it is not clear that it has taken off the pressure from Starmer.
The US dollar is lower against all the G10 currencies, led by the Australian and New Zealand dollars, though the Australia reported disappointing household spending figures. While the daily momentum indicators seem to have favored the greenback, the price action before the weekend called it into question. The reaction of American investors to the move by Beijing may set the tone ahead of the heavy schedule of economic reports due in the coming days....
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