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Sanae Takaichi Elected as Japan's Prime Minister: Yen Weakens, Dollar Supported. 1. Japan's hardline conservative Sanae Takaichi won a House of Representatives vote on Tuesday, becoming the country's first female prime minister. The yen weakened, with USD/JPY rising as much as 0.58% to 151.60. Investors expect the Takaichi government to increase fiscal spending and maintain loose monetary policy, which could exacerbate depreciation pressure on the yen and further uncertain the Bank of Japan's interest rate hike prospects. 2. Despite the market's anticipation of Sanae Takaichi's support from the right-wing opposition Restoration Party, the yen remained under pressure. Hirofumi Suzuki, chief foreign exchange strategist at Sumitomo Mitsui Banking Corporation, stated that while fiscal stimulus is likely, its magnitude is likely to be limited, potentially avoiding a significant depreciation of the yen, but moderate depreciation pressure will persist. Other currency pairs, such as EUR/JPY and GBP/JPY, rose as much as 0.44% to 176.23 and 0.4% to 202.81, respectively. 3. Local media reported that Sanae Takaichi plans to appoint former Minister of Regional Revitalization Katayama Satsuki as Finance Minister. Katayama Satsuki previously stated that the "true value" of the dollar against the yen should be between 120 and 130, significantly lower than current levels, suggesting she favors a stronger yen. Her appointment may prompt a reassessment of yen shorting strategies, but investors remain concerned about Kaoshi's preference for fiscal expansion. HSBC's Chief Asia Economist, Fred Neumann, noted that Kaoshi's fiscal easing could delay the Bank of Japan's monetary tightening plans, posing a dilemma for the central bank. A weak yen raises import costs, increases living pressures, and impacts the ruling party's approval ratings. Markets are focused on whether Katayama supports the Bank of Japan's gradual rate hikes from 0.5%. In global forex markets, the US dollar index rose 0.25% to 98.85, drawing support from a weaker yen. GBP/USD fell 0.25% to 1.3371, EUR/USD fell 0.2% to 1.1618, and AUD/USD fell 0.4% to 0.6499. Market sentiment is optimistic, partly because Trump said he would reach a fair trade agreement with China and the US government shutdown is expected to end this week. 6. Despite this, investors remain cautious about the Federal Reserve's policy meeting next week. Attrill of the National Australia Bank said that market expectations for a December rate cut may be shaken by the Fed's comments. The upcoming US CPI data and the results of the Fed meeting will become key drivers of the foreign exchange market.