According to FXStreet, in today's trading session, September 28, the USD/JPY pair fell sharply to nearly 142.50. The reason was that the Japanese Yen (JPY) strengthened after Shigeru Ishiba, former Japanese Defense Minister, won the election for Prime Minister.
The yen’s rise suggests the market believes Ishiba’s new administration will allow the Bank of Japan (BoJ) to continue raising interest rates. Ishiba previously told Reuters that he supported the bank’s current policy of raising interest rates.
The US dollar also weakened after US inflation data for August came in lower than expected. Annual inflation fell to 2.2%, compared to an initial forecast of 2.3%, and the July figure was 2.5%. The core inflation index, the Federal Reserve's main gauge, rose as expected to 2.7%.
The US Dollar Index (DXY), which measures the greenback against six major currencies, has fallen to near its lowest level of the year at 100.20. If the US Dollar continues to weaken, it could start a new bearish cycle.
With inflation pressures easing, many expect the Fed to cut rates by another 50 basis points in November. The Fed moved to cut rates by a larger than usual 50 basis points last week amid concerns that job growth was slowing.
According to Lao Dong, at 9:00 a.m. on September 28, the exchange rate of the Japanese Yen against the US dollar is currently anchored at its lowest level at 142.20 JPY/USD. Previously, the Yen had reached its highest level in many weeks at 146.49 IPY/USD.
