Forex News: Yen Falls Amid Political Uncertainty

Yen Falls Amid Political Uncertainty

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Thursday, with uncertainty surrounding the Liberal Democratic Party's leadership race following its coalition split with Komeito.

Worries over Japan's financial stability was eased and Sanae Takaichi's attempt to become the nation's first female prime minister was put in risk due to the ruling Liberal Democratic Party's (LDP) coalition break with the Komeito.

Along with increased trade tensions between the US and China and geopolitical risks, this further keeps the probability in favor of a rate hike by the BoJ later this year.

The Bank of Japan (BoJ) board member Naoki Tamura cautioned against premature tightening, indicating ongoing policy support, investor prudence increased.

Tamura stated that the central bank should bring its policy rate somewhat closer to the neutral level, which should be at least 1%.

He also stated that the BOJ should move closer to a neutral monetary-policy stance from the standpoint of risk management.

Asian stock markets traded higher amid growing expectations of imminent U.S. Federal Reserve rate cuts. Regional gains, however, remained capped somewhat by rising Sino-U.S. tensions.

A generally favorable risk tone and speculation that the BoJ would postpone further interest rate increases in the face of domestic political unpredictability proved to be major factors hurting the safe-haven JPY.

In economic news, data from the Cabinet Office showed that the value of core machinery orders in Japan was down a seasonally adjusted 0.9 percent on month in August, coming in at 890.0 billion yen. That missed forecasts for an increase of 0.4 percent following the 4.6 percent decline in July.

On a yearly basis, orders were up 1.6 percent - again shy of expectations for a gain of 4.8 percent and slowing from 4.9 percent in the previous month.

In the Asian trading today, the yen fell to a 1-week low of 190.14 against Swiss franc, from yesterday's closing value of 189.54. The yen may test support near the 192.00 region.

Against the euro and the pound, the yen slid to 2-day lows of 176.36 and 202.90 from Wednesday's closing quotes of 175.84 and 202.38, respectively. If the yen extends its downtrend, it is likely to find support around 178.00 against the euro and 206.00 against the pound .

The yen edged down to 151.27 against the U.S. dollar, from an early 9-day high of 150.52. On the upside, 154.00 is seen as the next support level for the yen.

Looking ahead, , Eurozone trade balance data for August is due to be released at 5:00 am ET in the European session.

At 7:00 am ET, Canada CFIB business barometer data for October and UK NIESR monthly GDP tracker for September are slated for release.

In the New York session, Canada housing starts data for September, U.S. Philadelphia Fed manufacturing index for October, U.S. NAHB housing market index for October and U.S. EIA crude oil data are set to be published.

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