- The Japanese Yen (JPY) falls for a second day
- The upper house elections could be a turning point
- The US Dollar (USD) falls against its major peers
- Fed continues to attack Powell
The US dollar Japanese yen (USD/JPY) exchange rate is rising for a second day. The pair rose 0.39% in the previous session, settling on Thursday at 148.45. At 17:30 UTC, USD/JPY is 0.06% higher at 148.54 and trades in a range of 148.19 to 148.89.
The yen is under pressure ahead of Sunday’s elections, which could be a turning point for the country. Recent polls suggest the government is facing the loss of its majority in the upper house. As a result, elections in the lower house can’t be ruled out. Increased political instability and concerns over future fiscal policies could arise at a time when the country is attempting to negotiate a trade deal with the US, making for a challenging path ahead.
Even if there are no changes to the upper and lower houses, the yen could still come under pressure if the government responds to the election results with another fiscal package rather than addressing the structural problem.
The US dollar is falling against its major peers. The US dollar index, which measures the USD against a basket of peers, is falling by 0.45% to 98.29, but is still on track to rise 0.45% across the week.
The US dollar is falling on Friday but is clinging to weekly gains as investors weigh signs that tariffs could be adding inflationary pressures, along with more Fed-bashing by U.S. President Trump.
According to the data for the week, inflation rose to 2.7% in June, although the increase was not considered alarming. Meanwhile, wholesale inflation showed that prices remained steady last month. Federal Reserve Chair Jerome Powell has warned that inflation could rise over the summer as a result of Trump’s trade policies, and as a result, has adopted a wait-and-see stance for further interest rate cuts.
Meanwhile, President Trump is becoming frustrated with Powell’s pause in rate cuts. However, Trump quickly dismissed rumors that he would fire Powell this week.
