- The Japanese Yen (JPY) is falling to a level last seen in July ‘24
- Fiscal dove Takaichi is set call a snap election
- The US Dollar (USD) rises to a 6-week
- US jobless claims fell to 198k
The US dollar Japanese yen (USD/JPY) exchange rate is rising after losses yesterday. The pair fell -0.43% in the previous session, settling on Wednesday at 158.45. On Thursday at 16:00 UTC, USD/JPY trades +0.06% at 158.65 and traded in a range of 158.23 to 158.88.
The yen weakened on concerns that Japanese Prime Minister Sanae Takaichi could gain a larger majority to push through her large spending plans and introduce more fiscally expansionist policies, which would pull the yen lower as Japanese bond yields rise.
A strong mandate could prompt Takaichi to pursue more aggressive fiscal policies, which could push USD/JPY toward 162. However, investors are also cautious that Japanese authorities could intervene in the foreign exchange market to support the yen.
The US dollar is rising across the board. The US dollar index, which measures the USD against a basket of currencies, is up 0.24% to 98.97, marking a third day of gains.
The U.S. dollar is rising to a 6-week high, tracking yields modestly higher after stronger-than-expected U.S. jobless claims data supported the view that the Fed could keep rates unchanged for longer.
US jobless claims fell to 198,000 last week, the lowest level since November, a decline of 9000. The figure was below expectations comes as claims have only fallen below 200,000 a few times in recent years. The data suggest that the market is still in a low-hiring, low-firing phase, with layoffs not meaningfully picking up at the start of the year.
Multiple large employers have recently announced plans to cut jobs, but these have yet to indicate to translate into hard data.
The data comes after yesterday’s report showed US retail sales and PPI inflation were stronger than forecast. The market is not expecting the Federal Reserve to cut rates in January. The market is pricing in the first 25-basis-point rate cut in June.
