Strong Yen against Hamstrung Yoshihide Suga| KOL Forex Analysis•Jasper Lo

Japan's Liberal Democratic Party (LDP) will elect a new leader to succeed the resigned Shinzo Abe as the next Prime Minister on September 14. This election, therefore, will be determined by the LDP factions rather than the country's public opinion. While Chief Cabinet Secretary Yoshihide Suga has taken a lead in the LDP's leadership race, he stressed to carry “Abenomics” forward with no novelty in his political platform.

In fact, the mess in the country's economy cannot be cleared up whatever Suga's politics are. Not only is Japan's economy the worst among the major industrial nations, but the government's debt-to-GDP ratio is the world's largest, which is even more than Greece and Italy that are known to be in debt crisis.

Consequently, I hold a gloomy view that the Japanese equities may be too high to keep the upside as Suga is not capable to guide the country out of its slump. The Nikkei 225 index has regained 7,142 points (43.60%) to 23,500 from a March low of 16,358 and is approaching to the triple top that was formed earlier, with the largest resistance lying in the 24,448.5 of September 2018, which is also the high level of October 1991. This index is expected to retreat after seeing little chance of breaking through the triple top.

A decline in Japanese stocks will trigger the unwinding of carry trade in the currency, driving a rise in risk aversion and strengthening the yen. At this stage, the weak U.S. dollar leaves limited space for the yen to drop sharply, with the biggest upper resistance against the yen between 107.04 and 108.16. On the contrary, if the Nikkei does fail to hit the top and fall steeply in the future, USD/JPY will have a chance to challenge the 104.19 low of July 31, where a breach below will see the yen showing its power. In addition to the election of the LDP's leader, investors should also pay attention to the central bank's interest rate meeting on September 17, noticing whether the monetary policy will change after the new Prime Minister takes office.

[About The Author]

Since 1987, Jasper Lo has been engaged in the financial industry

(forex, futures and gold) for more than 32 years and holds forex R.O.,

securities and futures broker licenses. Mr Lo is an expert in trading

forex, precious metals and commodity futures and an basic and technical

analyst.

Over the years, Mr Lo won many individual and team sales champion

awards, as well as outstanding employee awards. He was invited, as a

guest mentor, to the University of Hong Kong, Guangdong Ocean University

and Guangzhou Jinan University. And he was also appointed as the chief

training consultant by Hantang Securities and Dongguan Securities in

China.

Mr Los experience as guest of honor invited by media including Chinese and English newspapers and columnist:

-Guest of honor invited by TVB New Channels such as Finance Channel, Forex Focus, Global Watch

-Guest of honor invited by Now Finance Channel - Forex Reports

-Guest of honor invited by i-CABLE Finance Info Channel - Forex Opportunities

-Guest of honor invited by ViuTV - Investor Smarter Group

-Columnist of Finance and Forex Market of Ming Pao

-Presenter of Finance and Forex Forecast of Ming Pao

-Presenter of Investment 36 Stratagem and Technical Analysis in 1 Min of Ming Bao Finance

-Appointed lecturer of Ming Pao Investment Seminar and Paid Course

-Author of the best seller Investment 36 Stratagem

-Columnist of Forex Expert, Forex Analyst, Marathon Weekly of ET Net

-Guest of honor of Open Good Morning of ET Net

-Guest of honor of Metro Finance Channel - Market Opening, Instant

Market Fighting, Guangdong-Hong Kong Finance, Finances Power, Market

Analysis

-Guest of honor of New Era of Investment of RTHK

-Columnist of Capital Commodities of Capital Weekly

-Guest Presenter of Wang Guanyi Online Finance Channel - Fund and Commercial Bond

-Columnist of Wealthub Finance and Investment Smart Platform of Enrich Culture

-Guest presenter of Weekly Investment in the World of Enrich Culture

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