Yen Falls for 4 Days, What's Wrong with Japan?
The Japanese yen weakened for the fourth consecutive day against the US dollar, pushing USD/JPY to its weakest level since mid-January in Thursday's Asian session. The main pressure came from market concerns about Japan's fragile fiscal condition amid Prime Minister Sanae Takaichi's plans for a new stimulus package. Data released earlier this week also showed the Japanese economy contracted again in the third quarter for the first time in six quarters, raising the possibility of the Bank of Japan delaying interest rate hikes further and further pressuring the yen.
At the same time, risk-on sentiment in global markets weakened the yen's appeal as a safe haven. Conversely, the US dollar strengthened to its highest level since late May as market participants viewed the Federal Reserve as less dovish and possibly less likely to cut interest rates. This combination kept the yield spread between the US and Japan wide, leading to capital flows favoring the dollar over the yen.
The prolonged yen weakness prompted verbal intervention from Japanese authorities, but these comments have so far failed to reverse the trend. For the market, this signals that the path of least resistance for the yen remains toward further weakness. Focus now shifts to the delayed release of US Nonfarm Payrolls (NFP) data, which has the potential to trigger new movements for the USD/JPY pair in the coming sessions. (az)
Source: Newsmaker.id
