On Monday, the yen continued to lose value—that makes seven days in a row—hitting a recent low when traded during Asia market hours versus the dollar. Investors are uneasy; new Prime Minister Sanae Takaichi might boost government spending while holding off on controlling inflation, which worries people about how stable Japan’s finances will be.
Japan’s service sector saw prices climb a bit in September, going from 2.7% to 3.0%. However, this didn’t really boost the Yen’s value. Even with inflation staying high—above what the Bank of Japan wants—many believe the bank won’t rush to raise interest rates.
Amidst all this, the dollar isn’t really taking off right now. Investors expect the Fed to lower interest rates, especially after recent inflation numbers came in low. It looks like rate cuts are expected later this week—maybe even in December too.
With easing US-China friction, investors feel more willing to take chances, so the yen—typically a secure bet—isn’t drawing much interest. Still, traders aren’t rushing in; key choices from the Federal Reserve this week and, likewise, the Bank of Japan the next day will probably determine where the USD/JPY currency pair heads.
If prices climb beyond 153.30, further gains seem likely. However, holding above 152.65 is key for now.
