October election coming
With the German election results and the snap election call from Abe, you would expect a bit more volatility in the yen. It’s generally lower but EUR/USD is down just 66 pips and USD/JPY is up 24 pips.
The election will likely take place on Oct 22, according to a Bloomberg report.
He’s going to campaign on maintaining the planned rise in the consumption tax but instead of balancing the budget, he will unveil an $18 billion stimulus pacage to be focused on preschool and higher education. The consumption tax is slated to rise to 10% in Oct 2019 from 8% now.
«To increase investment in future generations, I decided today to change
the way we had promised to use the sales tax,» Abe said. «I am changing
a pledge that was made to the public, and one that affects people’s
livelihoods, so I must swiftly seek the will of the people.
Japan is the canary in the debt coal mine. So far the market just doesn’t care that it’s debt is completely unsustainable — you can always print more of your own currency.