- The Japanese Yen (JPY) is falling for a third session
- Yen and JGB demand were weak amid wariness
- The US Dollar (USD) falls against major peers
- Partial government shutdown disrupts jobs data
The US dollar Japanese yen (USD/JPY) exchange rate is rising for a third straight session The pair rose 0.55% in the previous session, settling on Monday at 155.62. On Tuesday at 19:00 UTC, USD/JPY traded+0.11% at 155.79 and traded in a range of 155.31 to 156.09.
The yen is falling as the market has been selling out of the yen and Japanese bonds in the run-up to the Japanese election this weekend. The market is concerned that Prime Minister Sanae Takaichi will secure a stronger mandate for more expansionary fiscal policies.
A 10-year Japanese Bond sale this week saw demand fall below the 12-month average, reflecting investors’ wariness toward Japanese debt ahead of the election.
The U.S. dollar is rising against the yen but falling against its major peers. The US dollar index, which measures the USD against a basket of currencies, is falling -0.19% on Friday to 97.45, after gains yesterday.
The dollar is rising against the yen but falling against major pairs as investors continue to weigh positive economic data and shifting expectations around Federal Reserve policy against the partial US government shutdown.
The US dollar had been on a stronger footing recently, recovering from a four-year low following the nomination of Kevin Walsh as the next Federal Reserve chair. Markets expect him to be less likely to press for rapid rate cuts compared to the other candidate.
Markets had been looking to jobs data this week for more insight into how U.S. economic conditions were evolving. The partial shutdown of the federal government, however, means that labour market data is once again in short supply.
Yesterday, ISM manufacturing figures were stronger than expected, rebounding to the highest level since August 2022.
Richmond Fed President Tom Barkin said today that rate cuts are supporting the jobs market.