Yen Exhausted, Japan Still Relaxed?
The Japanese Yen (JPY) weakened again against the US Dollar in Monday's Asian session, remaining near the nine-month low reached last week. Recent data showed the Japanese economy contracted in the July-September quarter for the first time in six quarters, just as Prime Minister Sanae Takaichi was preparing a fiscal stimulus package and continuing to support ultra-loose monetary policy. This combination of stimulus and ultra-low interest rates eased speculation of a BoJ rate hike and added pressure on the Yen, allowing USD/JPY to remain above the 154.50 level.
However, market participants are becoming cautious. Many believe that prolonged yen weakness could trigger Japanese government intervention in the foreign exchange market to stem further declines. This concern has discouraged traders from aggressively selling the JPY. At the same time, weak sentiment on global stock markets has provided some "brake" on the Yen's weakening, as the JPY remains viewed as a safe haven asset when risk increases.
On the other hand, the US Dollar itself is not entirely strong, as markets remain concerned about slowing US economic momentum following the longest government shutdown in history. This raises questions about the continuation of the USD/JPY rally that has been ongoing for the past month. The market is now wondering: who will change course first—the Bank of Japan's stance, the Japanese government's intervention, or the sudden surprise of US economic data? (az)
Source: Newsmaker.id
