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Japanese yen slides as political drama continues

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The yen is sharply lower on Wednesday. In the European session, the USD/JPY is trading at 144.82 at the time of writing, up 0.89%.

New finance minister makes markets uneasy

In Japan, the dust is yet to settle on the political drama. On Tuesday, the new Prime Minister, Shigeru Ishiba, appointed Katsunobu Kato as finance minister. Kato is a supporter of “Abenomics” which advocates monetary easing. This could complicate the BoJ’s plans to tighten policy and the yen has responded with sharp losses today.

Ishiba is on record for supporting a tighter policy but may have chosen Kato to ease concerns that Ishiba will make a significant shift in monetary policy with a snap election on October 27. The election will be followed by the next BoJ meeting on October 31, with the BoJ expected to maintain its policy settings.
Japan and US manufacturing PMIs continue to contract

Manufacturing continues to sputter in both the US and Japan. The Japanese manufacturing PMI eased to a revised 49.7 in September, down from 49.8 in August and above the market estimate of 49.6. This was the third straight month of contraction in factory activity, with a strong decrease in export orders. Business confidence dropped to its lowest since December 2022, as manufacturers don’t see a light at the end of the tunnel for the troubled manufacturing sector.

In the US, the ISM manufacturing PMI was unchanged in September at 47.2, below the market estimate of 47.5. The contraction in manufacturing has extended for six straight months. New orders decreased in September, demand remains weak and manufacturers face uncertainty over the Federal Reserve’s monetary policy and the upcoming US election.

USD/JPY Technical

  • USD/JPY has pushed above resistance at 143.69 and 144.41. Above, there is resistance at 145.25
  • There is support at 142.85 and 142.13

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Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
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