Core Viewpoint - The market anticipates that Prime Minister Fumio Kishida's victory will enable him to expand fiscal stimulus while maintaining confidence in financial markets, leading to a potential significant weekly appreciation of the yen since November 2024 [1]. Group 1: Yen Appreciation - The yen rose over 0.3% on Thursday, marking its fourth consecutive day of gains, with a cumulative appreciation of approximately 2.8% for the week [1]. - The demand for safe-haven assets, amid ongoing sell-offs in risk assets, has also supported the yen [1]. Group 2: Political Stability and Fiscal Policy - Analysts interpret Kishida's victory as a reduction in political uncertainty and a decrease in the worst-case fiscal scenario risks, contributing to the yen's strength and a decline in Japanese government bond yields from recent highs [3]. - Kishida acknowledged market concerns regarding a two-year food consumption tax cut plan and reiterated that this measure would not be financed through bond issuance, alleviating fears of fiscal deterioration [4]. - Following the overwhelming victory of the Liberal Democratic Party, the easing of fiscal concerns and expectations of a Bank of Japan interest rate hike have driven the yen's strengthening trend, with a 78% probability of a rate hike in April indicated by overnight index swaps [4]. Group 3: Market Speculation on Government Intervention - The heightened vigilance of Japan's top currency official regarding foreign exchange trends has sustained market speculation about potential government intervention, which in turn limits the yen's downside [5]. - On January 23, the yen experienced a maximum intraday increase of approximately 1.75%, the largest since August of the previous year, prompting widespread speculation about possible government intervention in the currency market [5]. Group 4: International Relations and Currency Policy - U.S. Treasury Secretary Janet Yellen stated that the U.S. maintains a strong dollar policy and will "absolutely not" intervene in the currency market to support the yen, while Japan's Finance Minister Katsunobu Kato emphasized close communication with Yellen regarding their shared responsibility to maintain stability in the USD/JPY exchange rate [7]. - Morgan Stanley's forex strategist noted that Yellen's comments do not rule out additional verbal or actual intervention, but emphasized the importance of establishing the correct fundamentals for the foreign exchange market in the long term [7]. Group 5: Upcoming Economic Indicators - Investors are expected to focus on the remarks of Bank of Japan's hawkish board member Naoki Tamura and U.S. CPI data to assess the outlook for the interest rate differential between the U.S. and Japan, as well as the direction of the yen [8].