US Dollar Reaches 3-Month High Against Yen

Shinzo Abe's ruling coalition garnered a two-thirds "super majority" after securing 312 of the 465 seats. While the election result was largely along expected lines, the magnitude of the mandate dented investor sentiment in the yen. The USDJPY pair spiked to as high as 114.09 following the news, its highest level in more than three months.

The greenback was already on bullish footing thanks to the US Senate approval of a budget blueprint for fiscal year 2018, overcoming a critical hurdle for Republicans to proceed with their tax-cut package. On the economic data front, sales of existing homes in the United States rose 0.70% month-on-month through the end of September to a seasonally adjusted annual rate of 5.39 million units, easily beating market expectations of a -1.00% drop. After briefly climbing above the 114.000 mark, USDJPY has since pulled back to around 113.700.

In another confirmation that deflation risks in Germany have further eased, producer prices in the country rose at the fastest clip in 5-months during September, with inflation climbing across all the main industrial groups. Data from the Federal Statistical Office published on Friday showed that the Producer Price Index edged 3.10% higher on an annual basis through the twelve months ended in September, compared to a 2.60% rise in the prior month. It was the highest level of input price inflation since April, and topped the consensus market estimate of a 2.90% gain.

Inflation in Europe’s biggest economy has improved markedly this year, boosted by stronger than expected growth across the currency bloc and a rebound in energy prices. DAX 30 futures are pushing back towards 13000 ahead of the all-important European Central Bank meeting approaching on Thursday.