Yen Surges on Fed Rate Cut Bets and Japan's Political Scene
The yen has had a significant week, surging 1.3 per cent to 147.52 per dollar, its largest gain since mid-May. This comes as traders anticipate rate cuts by the Federal Reserve and consider potential moves by the Bank of Japan (BOJ) and Japan's political landscape.
The yen's rise was trimmed slightly on Friday, but it remains on track for its best weekly performance in over four months. Traders are almost certain that the Fed will cut rates by 25 basis points in October, with a 90 per cent chance of another cut in December.
Markets are also watching the BOJ, with Governor Kazuo Ueda reiterating the bank's commitment to raising interest rates if economic indicators align with forecasts. Ueda's comments could influence the market towards a rate hike at the BOJ's October 30 meeting. However, there's no indication that a new BOJ president will be elected on this date.
The focus is also on Japan's political scene, particularly the Liberal Democratic Party election on Saturday, which will determine the country's next prime minister. Meanwhile, a Chicago Fed report estimates the September jobless rate at 4.3 per cent, unchanged from August.
The yen's strong performance this week reflects market expectations for Fed rate cuts and BOJ policy movements. As Japan's political situation evolves and economic data is released, the yen's trajectory will likely continue to be influenced by these factors.
