Finance
Morning Bid: Turbocharged 'Takaichi trade' puts markets on yen watch
Published by Global Banking and Finance Review
Posted on January 14, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on January 14, 2026
A look at the day ahead in European and global markets from Ankur Banerjee
And just like that we are back screen gazing as the yen edges towards 160 per dollar, stoking intervention worries, as the prospect of a snap election next month in Japan turbocharges the so-called "Takaichi trade".
Investors are selling both the yen and longer-term Japanese government bonds (JGBs) for fear of low rates and more stimulus in an economy with one of the highest debt burdens in the developed world.
The expectation of more stimulus and the frail yen propelled the Nikkei through the key 54,000 mark for the first time on Wednesday after local media reported Prime Minister Sanae Takaichi might call for a general election in February.
With the yen at its weakest level against the dollar since July 2024, traders are wary of authorities taking action even though intervention could be tricky just ahead of an election.
Still, the market is vigilant because a snap vote could also lead to Japan facing its own version of the U.S. fiscal cliff.
Meanwhile, precious metals continue their strong start to 2026 after eye-popping returns last year as silver and gold scale record peaks as geopolitical tensions fuel safe-haven flows.
The dollar on the other hand has had to wrestle with soft U.S. economic data and worries around the Federal Reserve's independence.
Data on Tuesday showed U.S. inflation was mellow, keeping rate cuts in 2026 on the table although traders do not expect the Fed to move before Chair Jerome Powell's term ends in May.
The escalating tussle between Powell and U.S. President Donald Trump has strengthened the case for diversification beyond the United States, some investors say, as murmurs of "Sell USA" trade reemerge.
The U.S. Supreme Court is expected to issue one or more rulings on Wednesday, which could include litigation on the legality of Trump's global tariffs.
The court is set to release rulings at about 10 a.m. ET (1500 GMT). The court does not announce ahead of time the rulings it intends to issue.
The spotlight later in the day will also be on earnings from Citigroup, Bank of America and Wells Fargo as traders look for comments on Trump's proposed 10% cap on credit card interest rates.
JPMorgan Chase, which on Tuesday reported quarterly profit that exceeded analysts' estimates, said the proposed cap would severely hurt consumers, weighing on the broader market.
Key developments that could influence markets on Wednesday:
Bank earnings, possible SCOTUS ruling on U.S. tariffs
(By Ankur Banerjee in Singapore; Editing by Kate Mayberry)
The yen is the official currency of Japan, symbolized as ¥. It is one of the most traded currencies in the world and is often used as a reserve currency.
Monetary policy refers to the actions taken by a country's central bank to control the money supply and interest rates to achieve macroeconomic goals like inflation control and economic growth.
Financial markets are platforms where buyers and sellers engage in the trade of assets such as stocks, bonds, currencies, and derivatives, facilitating capital allocation and liquidity.
Economic growth is the increase in the production of goods and services in an economy over a period, typically measured by the rise in Gross Domestic Product (GDP).
Foreign currencies are currencies that are not the domestic currency of a country. They are used in international trade and investment, and their exchange rates fluctuate based on market conditions.
Explore more articles in the Finance category
