According to Lao Dong, on October 22, the Japanese Yen (JPY) maintained its upward momentum against the US dollar (USD), after three consecutive sessions of decline. The Yen's recovery comes after the Japanese Finance Ministry released September trade figures showing a slightly reduced deficit, while a Reuters survey shows expectations that the Bank of Japan (BoJ) will soon raise interest rates.
Specifically, Japan recorded a trade deficit of 234.6 billion yen in September, slightly decreasing compared to 242.8 billion yen in August, although it has not yet met the forecast for surplus. Exports increased by 4.2% over the same period last year - the first increase since April - while imports increased by 3.3%, much higher than expected.
According to a Reuters survey, nearly6% of experts predict the BoJ will raise interest rates by 25 basis points, bringing the policy rate to 0.75% before the end of March 2026. 60% of experts alone believe that the interest rate increase could take place in this quarter. This forecast has helped the Yen recover, although the market is still affected by the results of the Japanese Prime Minister's election - when Ms. Sanae Takaichi, who has a dovish stance, became the country's first female Prime Minister.
Meanwhile, the US dollar weakened due to concerns about a prolonged US government shutdown. The USD Index (DXY) decreased slightly, fluctuating around 98.90. Investors are concerned that the government's shutdown could slow down the release of important economic data, making it difficult for the US Federal Reserve (Fed) to make policy decisions.
According to the FedWatch tool, the market is predicting a nearly 99% chance of a Fed rate cut in October and again in December. Fed Chairman Jerome Powell also confirmed that the Fed is still looking forward to a 0.25 percentage point cut this month, despite disrupted government operations making economic assessment more difficult.
