The USD/JPY pair dipped slightly to about 151.90, marking the end of its three-day upward trend during early Asian trading on Thursday. This shift seems tied to worries regarding US-China trade relations and the ongoing federal government shutdown in the U.S., which is negatively impacting the dollar against the yen. Later on Thursday, the Chicago Fed National Activity Index is set to be published.
Entering its fourth week, the U.S. government shutdown shows no signs of resolution. The Senate plans to hold another vote on the funding bill, but it’s expected to fall short. This shutdown is now one of the longest in U.S. history.
Additionally, the release of important economic data from the Bureau of Labor Statistics and the Census Bureau has been halted, complicating matters for the Federal Reserve. Nonetheless, the Fed lowered its key interest rate by 25 basis points on October 29 and may do so again in December, contributing to the dollar’s decline against the yen.
On Wednesday, Reuters reported that Japan’s new Prime Minister, Sanae Takaichi, is gearing up for an economic stimulus plan that could surpass last year’s $92 billion to address rising household expenses. Traders foresee that an expansive fiscal policy, coupled with a challenging relationship between the government and Japan’s central bank, might negatively influence the yen.
(This article was updated on October 23, 01:45 (Japan time) to clarify that the USD/JPY has recorded a slight decline below 152.00, not 192.00, amid the ongoing U.S. government shutdown.)
