Trouble in the land of the rising sun?

• Japanese bonds tumble on fiscal concerns
• FXTM’s JP225 ↓ 1% on political risk and risk-off mood
• Early elections are expected on 8th February
• JPC cross rise as JP225 tumbles
• Japan CPI + BoJ rate decision could spark more volatility

On Tuesday, Japanese government bonds (JGB) plunged due to fiscal concerns sparked by political uncertainty.

As bonds tumbled, yields surged to record highs – fueling a selloff on the Nikkei 225 (JP225).

(Greenland-related tariff threats and geopolitical risk have also impacted equities across the world)

Note: Japan's Prime Minister Sanae Takaichi will dissolve parliament on Friday, paving the way for an early election on 8 February.

Last week, we discussed how the USDJPY was a ticking timebomb but FXTM’s JP225 could be another contender if uncertainty intensifies.

Note: JP225 has tumbled over 1% today

Here is where things get interesting….

We have 4 JPC crosses which are buzzing with activity.

The selloff on the JP225 (Nikkei 225) has pushed these JPC crosses higher today:

• CHCJPC (CN50 vs JP225): ↑1.7%
• DJCJPC (US30 vs JP225): ↑1.9 %
• NACJPC (NAS100 vs JP225): ↑1.8%
• SPCJPC (US500 vs JP225): ↑2.0%

JPC crosses could push higher if the JP225 continues to weaken on political risk.