- The Japanese Yen (JPY) is falling, adding to last week’s losses
- Japanese PM resigned, the BoJ is less likely to hike rates
- The US Dollar (USD) is falling versus its major peers
- US non-farm payrolls cement a September rate cut
The US dollar Japanese yen (USD/JPY) exchange rate is rising on Monday, adding to gains from last week. The pair rose 0.24% in the previous week, settling on Friday at 147.41. On Monday at 12:30 UTC, USD/JPY trades 0.28% higher at 147.83 and traded in a range of 147.47 to 148.58.
The yen is weakening on Monday after Prime Minister Shigeru Ishiba resigned over the weekend, after months of mounting pressure and a pair of election defeats, leaving the Liberal Democratic Party with a minority government.
Isiba had resisted resigning for weeks, insisting that the country needs stability as it negotiated a deal with the US to lower tariffs. With the agreement in place, Ishiba has stepped down.
The yen has weakened; however, long-dated Japanese bond yields have jumped amid rising concerns over the fiscal and economic outlook. The BoJ is less likely to hike rates amid political instability.
The US dollar is rising against the yen but falls versus its major peers. The US dollar index, which measures the USD against a basket of peers, is falling 0.07% on Monday after a flat week last week.
The USD is under pressure following last week’s soft nonfarm payroll report, which raises concerns over the health of the US jobs market, whilst cementing Fed rate cut bets.
22K jobs were added in August, down from 79k in July, while a downward revision to June’s figures saw job creation fall for the first time since 2021.
The market is fully pricing in the I-25 basis point rate cut from the Fed in September, and investors see a slight chance of a 50 basis point cut.
The primary focus this week will be on US inflation data on Wednesday, which will be the last major data point before the Fed’s meeting. A hotter-than-expected CPI print could prompt the market to rein in its super-sized reduction bets.
