USD/JPY is rising as pre-election concerns the ruling LDP party could lose weakens the Yen. 

• A change in leadership could influence the BoJ’s policy trajectory, keep interest rates low, and weigh on JPY. 
• The US Dollar benefits from an improved economic outlook and less aggressive monetary easing projections.  

USD/JPY is trading over 1.2% higher on Wednesday as it exchanges hands in the 152.90s, an over ten-week high for the pair. USD/JPY is slightly off its highs of the day after the US Dollar (USD) edged lower following the release of US Mortgage Applications which sank by 6.7% in the third week of October. It was the metric’s fourth consecutive contraction and extended the 17% plunge registered in the previous week (ending October 11). 

More broadly, a combination of political instability in Japan and shifting economic forecasts, coupled with a revision of expectations about the future path of interest rates in the United States (US) is propelling the pair higher.

The Japanese Yen (JPY) has been experiencing considerable selling pressure due to domestic political uncertainty. Recent polls suggest that the ruling Liberal Democratic Party (LDP) may lose its majority in the upcoming general election. A potential leadership shift or the need for a coalition could complicate the government's policy-making, including the Bank of Japan’s (BoJ) approach to policy making – a major factor impacting the Yen. 

The International Monetary Fund's (IMF) downgrade of Japan's economic growth forecast to 0.3% for this year, down from a previous 0.7%, further exacerbates this pressure. A weaker economic outlook generally reduces demand for a currency, contributing to a decline in its value.