- The Japanese Yen (JPY) rose last week but could struggle this week
- Dove Sanae Takaichi won the election this weekend
- The US Dollar (USD) fell versus its major peers last week
- US government shutdown continues
The US dollar Japanese yen (USD/JPY) exchange rate rose for a second straight day on Friday. The pair rose 0.13% in the previous session, settling on Thursday at 1477.26. On Friday at 21:30 UTC, USD/JPY trades +0.13% at 147.45 and traded in a range of 147.08 to 147.83. The pair fell 1.35% across the week.
The Japanese yen posted its strongest weekly gain against the USD since mid-May, driven by safe-haven demand, despite comments from BoJ Governor Ueda, who struck a cautious tone about the global economy’s outlook, lowering expectations for an imminent rate hike.
The markets were also focused on the Liberal Democratic Party election, which took place yesterday.
Dovish party veteran Sanae Takaichi won the election, and she is likely to become the first female Japanese prime minister.
While the Japanese stock market is likely to receive support from the result, the Japanese bond market and the yen are expected to come under pressure, given her support for easy fiscal and monetary policy.
The US Dollar is falling across the board. The US Dollar Index, which measures the greenback against a basket of major currencies, fell -0.13% at 97.72. The US index fell by 0.44% across the week.
The U.S. dollar fell sharply last week, posting its worst weekly decline against its major peers since August, amid uncertainty surrounding the U.S. government shutdown, which prevented key data releases that would provide insight into the health of the U.S. economy.
The US non-farm payroll report for September was due to be released on Friday, but was not published due to the government shutdown.
If the shutdown lasts for a long time, several weeks, then the closure could raise questions about governability in the US, which could cause further market concern.
The ISM services PMI was released on Friday and fell to 50 in September, the break-even level between expansion and contraction, down from 52 in August.