Political turmoil plays havoc with currency markets, boosts dollar
The dollar is again winning the cleanest-dirty-shirt contest this morning as mounting political turmoil in Japan and the euro area casts a pall over currency markets. The yen is down almost 2 percent and Japanese equity markets are soaring after Sanae Takaichi unexpectedly triumphed in the Liberal Democratic Party’s leadership race, defying polls that had put her rival, Shinjiro Koizumi, ahead among party grandees. Investors believe Takaichi—an advocate of looser fiscal and monetary policy in the mould of Shinzo Abe’s “Abenomics”—could seek to unleash fresh government stimulus while pressing the Bank of Japan to pause its tightening. Options markets have...