Yen exchange rate today
According to Lao Dong, on July 21, the Japanese Yen (JPY) continued to be under pressure at the beginning of the new week, after the results of the Japanese Senate election on Sunday left the ruling coalition in a state of disarray.
The Liberal Democratic Party (LDP) and Komeito failed to win a majority of seats, raising concerns that the government will have difficulty implementing the new policy, especially in the context of Japan seeking to negotiate trade with the US ahead of the tax deadline on August 1.
Yen continues to be pressured after the election
According to FXSTreet, the US is currently threatening to impose a 25% tax on all exports from Japan if the two sides do not reach an agreement, especially regarding the US protection of the domestic rice market. Meanwhile, the opposition in Japan is calling for increased public spending and tax cuts, raising concerns about public debt.
In addition to political issues, economic factors such as slowing growth, falling real wages and signs of cooling inflation also increase the likelihood that the Bank of Japan (BoJ) will delay the interest rate hike plan until at least the end of October. Tradition shows that the BoJ is often on the sidelines when political instability occurs, which causes the Yen to depreciate against the USD.
However, uncertainty surrounding US trade policy under President Trump is still supporting the yen's safe-haven asset role. At the same time, the USD has not been able to increase sharply due to mixed signals from the US Federal Reserve (Fed) on the interest rate cut roadmap.
Last week, Fed Governor Christopher Waller gave a soft view, favoring the possibility of a rate cut in July. However, the market still believes that the Fed will keep interest rates higher for longer due to inflationary pressures, and it is expected that it will wait until September or the end of the year for a sharp decrease.
Today, the Japanese market closed for the Sea Day holiday, without any important data from the US being released, causing the USD/JPY pair to be mainly dominated by the USD price movement. This weekend, the market will monitor the preliminary global PMI index, which may impact the short-term demand for the Yen.
