00:00What's the market set up for when it comes to Japan and this election?
00:03I think ultimately, given the polling, I think the consensus now is that she will ultimately expand her slim majority.
00:09And I think for dollar-yen, I think what's been interesting is that we saw those rate checks a couple of weeks ago
00:13and that knocked dollar-yen sharply lower.
00:16And at that point, I'm of the view that that would have been the time to do intervention
00:19because you could have easily sent dollar-yen into the 140s at some point.
00:23However, markets have kind of been cynical as to whether they actually follow through for the intervention.
00:27You know, since Scott Besson, relatively cool on the prospect of joint intervention.
00:32And we've kind of risen four handles.
00:33So, you know, there's a worse entry point for Japanese officials to intervene than they had done.
00:38And if, you know, we do get another rate check after the election, if the yen does really start to sell off,
00:43I think the markets can be a lot more cynical as to whether they'll actually follow through an intervention.
00:48And also as well, you know, they'll probably need a softer dollar in order to get the maximum bang for their buck.
00:53But, you know, that opportunity does look as if it has potentially faded a bit
00:56and they're leaving themselves a bit of a hostage to fortune.
00:59You know, we're still awaiting US CPI data.
01:01If that comes in soft, yes, it could be back on the table.
01:04But, yeah, it's not a favourable set-up for those who are looking to be short dollar-yen at the moment.
01:08If we do get softer dollar, we can get a stronger euro.
01:11And euro's strength has been there.
01:14And we've seen that be impacted the corporates, certainly in 2025.
01:18Christine Nagar didn't seem to be too concerned about the strength of the euro yesterday.
01:21What stood out to you?
01:22How clear is the path ahead for the eurozone, for the ECB,
01:26and whether or not there is going to have to be an FX take, at least,
01:30or maybe some kind of verbal jaw-boning of the single currency?
01:36Yeah, I mean, she was definitely a lot less, you know, cooler on the idea than she could have been
01:39because, obviously, you know, we were hit with like 120 last week
01:41and that's, you know, that's kind of a line in the sand that ECB officials have drawn
01:45because of those comments from Louis de Guindos last year.
01:47We've pulled back about, you know, two handles since then.
01:50So there wasn't really that urgency for her to kind of, like, say too much.
01:53But ultimately, euro-dollar, you know, is decoupled from rate differentials.
01:57And even if they cut, there isn't really too much they can really do about it.
02:00But I would say as well, euro-dollar, you know, it's a relatively crude way
02:03to assess the strength of a currency.
02:04You know, on ECB website, they cover the nominal effective exchange rate.
02:08And that's not really showing anything that remarkable at the moment.
02:11So I don't think there's really much urgency at these levels for policymakers to step in.
02:16Very briefly on the gilt markets, how much risk premium is priced in with the politics?
02:20I think, you know, it's increasing yesterday.
02:22Today I think we have kind of stabilized a bit.
02:24I think, you know, betting markets are positioning for Starmer to leave at some point.
02:28But, you know, there hasn't really been any follow-through from some of the stories
02:30that we've seen early in the week.
02:32So I think that premium has receded.
02:34But I think ultimately we're headed for a steeper curve
02:35with our Danish Bank of England and, you know, politics risks.
02:39Anna Linton, thank you very much indeed.
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