- Japanese Yen (JPY) surges on PM news
- Interest rate hawk Shigeru Ishiba is the next PM
- US Dollar (USD) falls versus its major peers
- US inflation was cooler than expected
The US Dollar Japanese Yen (USD/JPY) exchange rate tumbled on Friday after a flat finish in the previous session. The pair rose 0.03% in the previous session, settling on Thursday at 143.91. At close on Friday, USD/JPY traded -1.80% at 142.19 and traded in a range of 142.07 to 146.50.
Based on the results of the Japanese Prime Minister leadership contest, the Japanese yen surged on Friday. Shigeru Ishiba, seen as an interest rate hawk, won the election to become Japan’s next Prime Minister. Markets have been expecting Sanae Takaichi, a vocal opponent of further rate hikes, to win.
The US Dollar fell across the board on Friday. The US Dollar Index, which measures the greenback against a basket of major currencies, closed at 100.43 at the time of writing, down 0.1%. The USD Index fell across the week, marking its fourth straight weekly decline.
The US dollar fell on Friday after data pointed to US inflation cooling further in September. The core PCE index, which is the Federal Reserve’s preferred gauge for inflation, rose 0.1% Month on month in September, down from 0.2% in August and below expectations of 0.2%.
On a three-month basis, core PCE rose 2.1%, in line with the central bank’s target.
The data also showed that spending rose just 0.1% after adjusting for inflation, and nominal personal income rose 0.2%. These were below forecast, and .2 price pressures continued to ease.
Treasury yields and the US dollar fell following the data amid expectations that the Fed will continue to cut interest rates over the coming months.
The Federal Reserve opted for a 50 basis point rate cut in August when it kicked off its rate-cutting cycle; however, investors are split over whether the Fed will make another outsized move in November or whether they will opt for a 25 basis point cut.
