USD/JPY pair edges higher to near 150.35, the highest since August 1, during the early Asian session on Tuesday. The Japanese Yen (JPY) weakens against the US Dollar (USD) on political stability concerns after Japan's ruling Liberal Democratic Party (LDP) elected a new leader. Traders will keep an eye on the Fedspeak later on Tuesday.

Japan's ruling party has elected Sanae Takaichi as its new leader on Saturday, positioning the 64-year-old to be Japan's first female Prime Minister. Her victory caused traders to reduce bets that the Bank of Japan (BoJ) will hike interest rates this month, weighing on the JPY and creating a tailwind for the pair.

"Sanae Takaichi's surprise victory in the LDP leadership election marks an important turning point for Japan's policy and market outlook," Societe Generale strategists wrote in a note, pushing back the likely timing of the BOJ's next rate hike to December from October.

Markets reduce their bets of a Bank of Japan (BoJ) rate hike at its October meeting. Overnight index swaps are currently priced in nearly a 25% chance of an increase, down from a 60% possibility before the LDP's leadership vote.

The US government shutdown entered its second week on Monday, with lawmakers unable to make progress on a deal to restart funding. Additionally, the US President Donald Trump administration warned it was moving forward with plans to slash the federal workforce.

Traders await signs that the US federal government will reopen as the shutdown is leaving a void of US economic data, with last Friday's Nonfarm Payrolls (NFP) report for September delayed along with other key releases until the government reopens. Concerns over a prolonged US government shutdown could undermine the Greenback against the JPY in the near term.

Source: Fxstreet