Japanese Yen struggles amid political uncertainty and risk-on mood; downside seems limited
The Japanese Yen (JPY) struggles to capitalize on the overnight bounce from a three-day low against a broadly weaker US Dollar (USD) and ticks lower during the Asian session on Friday. Investors now expect that domestic political uncertainty could give the Bank of Japan (BoJ) more reasons to go slow on interest rate hikes.
Moreover, concerns that Japanese Prime Minister Shigeru Ishiba’s successor might put pressure on the central bank to keep interest rates low fail to assist the JPY in attracting any meaningful buyers.
Apart from this, the prevalent risk-on mood is seen as another factor undermining the safe-haven JPY. Meanwhile, the incoming macro data from Japan reaffirms market expectations that the BoJ will stick to its policy normalization path, which is holding back the JPY bears from placing aggressive bets.
The US Dollar (USD), on the other hand, dives to its lowest level since July 24 amid bets for a more aggressive policy easing by the Federal Reserve (Fed). This should further contribute to capping the USD/JPY pair.
Source: FXstreet
