The Japanese Yen is under pressure, falling against the US Dollar as inflation slows and concerns arise about Japan’s fiscal health. The Bank of Japan faces less pressure to raise interest rates, while the US Dollar remains strong due to receding expectations of aggressive Federal Reserve easing.
- Japanese Yen slipped past 155 per dollar for the third consecutive session.
- Headline inflation dropped to 1.5%, the lowest since March 2022.
- Core inflation matched the Bank of Japan’s 2% target, the slowest pace in two years.
- Prime Minister Sanae Takaichi plans to boost strategic investment and pursue “active but responsible” fiscal policies.
- Concerns about Japan’s fiscal health undermine the Japanese Yen.
- The USD stands firm near its highest level since January 23 amid receding bets for aggressive easing by the US Federal Reserve.
- Japan’s Prime Minister said that she will steadily lower the debt-to-GDP ratio and restore fiscal sustainability.
The Japanese Yen is facing headwinds as economic data suggests a weaker inflationary environment, reducing the urgency for the central bank to tighten monetary policy. Fiscal concerns further weigh on the currency, while a stronger US Dollar, driven by shifting expectations for Federal Reserve policy, adds to the downward pressure. The future direction of the Yen may depend on upcoming economic data and any shifts in monetary policy from either the Bank of Japan or the Federal Reserve.