The Japanese yen weakened earlier this week following reports that the Liberal Democratic Party (LDP) and the Japan Innovation Party (JIP) had agreed to form a coalition government. This agreement opened the door for Sanae Takaichi to become Japan's first female prime minister, while also reviving expectations of large fiscal spending and loose monetary policy. As a result, the market began to speculate that the Bank of Japan (BoJ) would delay its next interest rate hike, pushing the yen lower and sending the USD/JPY pair rallying from 149.35.
However, the BoJ has not completely reversed course. Several central bank officials have continued to voice their commitment to continuing policy normalization and possibly raising interest rates again before the end of the year. Meanwhile, the US dollar has also been less than solid as investors have begun betting that the Fed will cut interest rates two more times this year. Global uncertainty—from US-China trade tensions to the US government shutdown—has also made market participants cautious, especially regarding safe-haven assets like the yen. (az)
Source: Newsmaker.id
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