Forex News: Yen Falls Amid Japan Political Uncertainty

Yen Falls Amid Japan Political Uncertainty

(RTTNews) - The Japanese yen continued to weaken against other major currencies in the Asian session on Wednesday, as worries over Japan's political future were raised, following suggestions that Japanese Prime Minister Sanae Takaichi could call an early snap election.

Reports showed that Takaichi would announce her intention to dismiss parliament on Wednesday, ahead of the start of fresh elections.

Asian stock markets traded mostly higher, boosted by the continuing record run by Japan's Nikkei. Report showing US consumer prices increased in line with estimates, while core consumer prices rose by slightly less than expected, has added to recent optimism about the outlook for interest rates.

While the US Fed is widely expected to leave interest rates unchanged at its January meeting, the central bank is still seen as likely to cut rates by at least another quarter point in the coming months. In economic news, data from the Bank of Japan showed that the M2 money stock in Japan was up 1.7 percent on year in December, coming in at 1,278.6 trillion yen. That was shy of expectations for an increase of 1.9 percent but steady from the November reading following a downward revision from 1.8 percent.

The M3 money stock was up 1.1 percent on year at 1,627.1 trillion yen, while L money added 2.1 percent to 2m240.9 trillion yen. M2 was up 1.7 percent on year for the fourth quarter of last year, and up 1.2 percent for all of 2025.

In the Asian trading today, the yen fell to a 35-yr low of 185.57 against the euro and a 1-1/2-year low of 159.45 against the U.S. dollar, from yesterday's closing quotes of 185.30 and 159.14, respectively. If the yen extends its downtrend, it is likely to find support around 187.00 against the euro and 161.00 against the greenback.

Against the Swiss franc and the pound, the yen edged down to 198.90 and 214.11 from Tuesday's closing quotes of 198.70 and 213.61, respectively. On the downside, 199.00 against the franc and 216.00 against the pound are seen as the next support level for the yen.

The yen edged down to 91.54 against the NZ dollar, from Tuesday's closing value of 91.33. The next possible downside target for the yen is seen around the 93.00 region.

Against the Australia and the Canadian dollars, the yen dropped to 1-1/2-year lows of 106.72 and 114.76 from yesterday's closing quotes of 104.55 and 114.58, respectively. The yen may test support around 107.00 against the aussie and 116.00 against the loonie.

Looking ahead, U.S. MBA mortgage approvals data, U.S. PPI and retail sales data for November, existing home sales data for December, U.S. EIA crude oil data and U.S. Fed Beige book report is slated for release in the New York session.

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