Credit Agricole CIB Research discusses USD/JPY outlook through the US elections outcomes this week.
"USD/JPY remains caught in a tug-of-war between the influence of relative rates and government bond yield curves and the impact of the US election. This tug-of-war may or may not come to a conclusion this week," CACIB notes.
"A clear result in favour of Biden would likely lead to a relief rally in USD/JPY and allow the exchange rate to play catch up with the move in rates in favour of the USD, dependent on the US economic data and the outcome of the FOMC meeting also this week. The FOMC will likely stay dovish. A surprise victory in favour of President Trump would also lead to a higher USD/JPY as investors buy into a repeat of the reflation trade that occurred in 2016. We also note that historically, the JPY has been the worst performing G10 currency against the USD," CACIB adds.