Dollar Strengthens, Yen Fails to Gain
Wednesday, October 8, 2025 — The Japanese yen weakened sharply again. Markets are concerned that a more expansionary fiscal policy under PM-elect Sanae Takaichi will make it difficult for the Bank of Japan (BoJ) to raise interest rates in the near future. Takaichi's close advisor, Takuji Aida, stated that a rate hike this month was premature, further pressuring the JPY. Coupled with US dollar buying, the USD/JPY pair pushed past 152.00.
However, Aida still opened the door to a 25 bps rate hike in January if the economy remains strong enough. Meanwhile, the market expects the Fed to cut interest rates twice this year. Expectations of a rate cut in the US could limit the dollar's gains in the coming months, narrowing the room for USD/JPY to strengthen.
Looking ahead, the divergence in policy direction between the BoJ and the Fed will be key to the yen's movement. If the BoJ signals gradual tightening while the Fed becomes increasingly dovish, support for the JPY could strengthen and limit the USD/JPY's rally. Market participants are now awaiting the FOMC minutes this Wednesday for clues on the pace of the next rate cut—which could trigger new movements in the forex market. (az)
Source: Newsmaker.id
