USD/JPY consolidates above 150.00 on "Takaichi's trade"  

• The Dollar consolidates above 150.00 after rallying 300 pips following Takaichi's victory.
• Takaichi is expected to revive Abenomics with a policy of high spending and easy monetary policy.
• In the US, the Government shutdown continues as the talks between Democrats and Republicans remain stalled.

The US Dollar stands at two-month lows right above 150.00 against the Japanese Yen on Monday, after having rallied about 300 pips from Friday's closing levels, following the victory of the pro-stimulus candidate, Sanae Takaichi in the weekend's LDP elections.

Takaichi is widely expected to replace Shigeru Ishiba as the country's first female prime minister, and her previous positions against monetary tightening have boosted expectations of a return to a looser monetary policy and bigger spending plans.

These hopes are putting into question the Bank of Japan's plans to tighten its monetary policy. Investors are dialling back expectations of a rate hike in October, which is triggering what markets have already named "Takaichi trade", consisting of a weaker Yen and higher equity indexes.

Yen weakness is the major driver of the USD/JPY rally, as, in the US, the fundamental scenario remains broadly unfavourable. The US government shutdown has entered its second week with the negotiations between Democrats and Republicans stalled, and Trump has threatened massive layoffs in the public sector. This is likely to weigh on the US Dollar as soon as investors turn their focus back to the US.