Yen Under Pressure, Snap Election Issues and BoJ's Position in the Spotlight
The Japanese yen continued to weaken and underperform amid speculation that Prime Minister Sanae Takaichi would call a snap election. This move is believed to be aimed at capitalizing on her high popularity and paving the way for a more expansionary fiscal policy. This sentiment pushed the Nikkei 225 index to a record high and reduced the yen's appeal as a safe-haven asset.
Pressure on the yen also came from uncertainty about the timing of the next interest rate hike by the Bank of Japan (BoJ) and the deterioration in Japan-China diplomatic relations. This combination of factors caused the yen to fall to its lowest level in a year against the US dollar in Asian trading on Tuesday.
However, potential Japanese government intervention to curb the yen's weakening is expected to limit further declines. On the other hand, US dollar strength was also limited by market concerns about the independence of the Federal Reserve. Market participants are now awaiting the release of US consumer inflation data for clues on the direction of the USD/JPY pair's future movement. (az)
Source: Newsmaker.id
