The Japanese Yen (JPY) touches a fresh low since early August against the US Dollar (USD) heading into the European session on Monday amid expectations that the election of a fiscal dove, Sanae Takaichi, could complicate the Bank of Japan’s (BoJ) task. In fact, Takaichi is expected to oppose any further monetary tightening by the BoJ, which, along with the prevalent risk-on environment, prompted aggressive selling around the safe-haven JPY at the start of a new week.
Meanwhile, a steep decline in the JPY provides a strong boost to the US Dollar (USD) and the USD/JPY pair, taking along some short-term trading stops near the 150.00 psychological mark. That said, bets that the US Federal Reserve (Fed) will cut interest rates two more times this year, along with concerns about the economic impact of the US government shutdown, could act as a headwind for the USD and cap any further appreciation for the currency pair.
Japanese Yen is weighed down by Takaichi’s win and reduced BoJ rate hike bets
- Sanae Takaichi was elected as the leader of the Liberal Democratic Party (LDP) in a run-off election held on Saturday and is now expected to be confirmed as Japan’s first female Prime Minister during a parliamentary session in mid-October. Takaichi stood out in the race as the only proponent of big spending and loose monetary policy.
- Expectations for more expansionary economic policies could complicate the Bank of Japan’s task and also seem to have raised the chances that the central bank will avoid raising interest rates this month. The optimism lifts Japan’s Nikkei 225 to a fresh record high and weighs heavily on the Japanese Yen during the Asian session on Monday.
- Meanwhile, BoJ Governor Kazuo Ueda reiterated last week that the central bank will raise interest rates if the economy and prices move in line with forecasts. Moreover, markets are fully pricing in another rate increase by the BoJ early next year, which might continue to offer some support to the JPY and help limit deeper losses.
- The BoJ’s hawkish stance marks a significant divergence in comparison to rising bets that the US Federal Reserve (Fed) will lower borrowing costs in October and in December. Adding to this, concerns about the economic impact of a US government shutdown might keep a lid on any further USD appreciation and cap the USD/JPY pair.
- Important US macro releases scheduled at the start of a new month have been delayed due to the government closure, leaving the USD at the mercy of speeches from influential FOMC members. This, along with the broader risk sentiment, could drive the USD/JPY pair ahead of Japan’s Household Spending data due for release on Tuesday.
USD/JPY could extend the momentum; breakout above 150.00 comes into play
From a technical perspective, last week’s bounce from the 100-day Simple Moving Average (SMA) and a subsequent move up beyond the 150.00 round figure will be seen as a fresh trigger for the USD/JPY bulls. Given that oscillators on the daily chart have again started gaining positive traction, spot prices might then aim to test the August monthly swing high, around the 151.00 neighborhood, with some intermediate resistance near the 150.65-150.70 region.
On the flip side, any corrective slide below the 149.40 immediate support could be seen as a buying opportunity and remain limited near the Asian session low, around the 149.00 mark. A convincing break below the latter could drag the USD/JPY pair to the next relevant support near the 148.35 region en route to the 148.00 round figure and the 147.80 zone, which, if broken, might shift the near-term bias in favor of bearish traders.
Japanese Yen Price Today
The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Euro.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.18% | 0.05% | 0.47% | -0.07% | -0.28% | -0.22% | 0.09% | |
| EUR | -0.18% | -0.24% | 0.21% | -0.28% | -0.50% | -0.43% | -0.12% | |
| GBP | -0.05% | 0.24% | 0.54% | -0.04% | -0.26% | -0.19% | 0.12% | |
| JPY | -0.47% | -0.21% | -0.54% | -0.48% | -0.80% | -0.75% | -0.42% | |
| CAD | 0.07% | 0.28% | 0.04% | 0.48% | -0.18% | -0.15% | 0.16% | |
| AUD | 0.28% | 0.50% | 0.26% | 0.80% | 0.18% | 0.07% | 0.38% | |
| NZD | 0.22% | 0.43% | 0.19% | 0.75% | 0.15% | -0.07% | 0.31% | |
| CHF | -0.09% | 0.12% | -0.12% | 0.42% | -0.16% | -0.38% | -0.31% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
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