Analyst: Shiba Yomu's resignation may further delay the tightening cycle of the Bank of Japan.

PEPPERSTONE senior analyst Michael Brown: I think it's not completely unexpected that Japanese Prime Minister Shinzo Abe has resigned, as it has been brewing for some time, but the timing of the announcement is definitely surprising. This is clearly going to bring huge downside risks to the yen and Japanese long bonds. This selling pressure may first come from the fact that the market now needs to price in a greater degree of political risk, not only in terms of competition within the ruling party leadership, but also in the possibility of a snap election if a new leader seeks political mandate. In addition, fiscal factors need to be considered, as leadership candidates may all propose looser fiscal policies than Abe, further pressuring long-end yield curves as demand for Japanese government bonds has already weakened significantly. For the Bank of Japan, all this political uncertainty may further delay its tightening cycle. Decision-makers have been extremely cautious about raising interest rates, and with increased political uncertainty, they are now more likely to continue to adopt a cautious stance.