The Japanese Yen has strengthened, achieving its best weekly performance since November 2024, despite some slippage against the dollar. Support stems from Prime Minister Takaichi’s election victory and anticipated fiscal expansion, as well as Bank of Japan (BoJ) member comments hinting at further monetary tightening. However, all eyes are on the US CPI release, which could influence the USD/JPY pair.
- The Yen is on track for its largest weekly gain since November 2024.
- Prime Minister Takaichi’s election victory is viewed as a positive sign of government stability.
- Takaichi plans fiscal expansion through subsidies, special tax measures, and non-tax revenues, avoiding new bond issuance for a sales tax cut on food.
- BoJ member Naoki Tamura suggested that interest rates are “considerably distant” from neutral, and the economy is approaching the 2% inflation target, hinting at possible rate hikes.
- Verbal interventions from Japanese authorities indicate continued vigilance regarding foreign exchange movements.
- The USD/JPY pair edges up above 153.50 as traders anticipate the release of US CPI data.
- The US CPI is expected to show a slight easing of inflation, which could impact Federal Reserve policy and the US Dollar.
The confluence of factors paints a picture of a currency buoyed by both fiscal policy expectations and hints of monetary tightening. The election results have instilled confidence, and plans for fiscal expansion are being cautiously received. Comments from the central bank regarding the potential for further interest rate hikes suggest a commitment to addressing inflation. These internal developments, combined with external factors such as US inflation data, will likely influence the Yen’s near-term performance.