Yen Falls After Takaichi Elected As Japan PM

(RTTNews) - The Japanese yen weakened against other major currencies in the Asian session on Thursday, as traders expect that the incoming prime minister, Sanae Takaichi, would support accommodating monetary policy and pursue expansionary fiscal policies.

As early as next month, traders anticipated that Prime Minister Takaichi will unveil a large stimulus plan. According to reports, the proposal might go beyond the JPY 13.9 trillion program last year, which was intended to reduce household inflation pressures.

The markets are also now anticipating a potential rate hike in January, although the Bank of Japan (BoJ) is generally expected to keep rates unchanged going forward.

Asian stock markets traded higher, amid optimism about the outlook for interest rates as markets are pricing in another rate cut by the U.S. Fed at its upcoming October 28-29 monetary policy meeting, despite the absence of vital data to gauge the trajectory of the economy.

According to CME Group's FedWatch Tool, investors are betting on a 96.7% chance of a 25-basis-point interest rate cut and a 3.3% chance of a 50-basis-point rate cut at the Fed's October 28-29 meeting.

Meanwhile, there is renewed uncertainty about trade relations between the U.S. and China following the latest remarks from US President Donald Trump. Reports suggest Trump threatened to bar "critical software" exports to China in retaliation for Beijing's latest round of rare earth export restrictions.

In the Asian trading today, the yen fell to near 2-week lows of 176.85 against the euro and 152.57 against the U.S. dollar, from yesterday's closing quotes of 176.41 and 151.99, respectively. If the yen extends its downtrend, it is likely to find support around 178.00 against the euro and 154.00 against the greenback.

Against the pound and the Swiss franc, the yen dropped to 2-day lows of 203.39 and 191.29 from Wednesday's closing quotes 202.91 and 190.90, respectively. The yen may test support near 205.00 against the pound and 192.00 against the franc.

Against the Australia and the Canadian dollars, the yen slipped to near 2-week lows of 98.98 and 108.98 from yesterday's closing quotes of 98.61 and 108.66, respectively. On the downside, 101.00 against the aussie and 110.00 against the loonie are seen as the next support levels for the yen.

The yen edged down to 87.48 against the NZ dollar, from yesterday's closing value of 87.17. The next possible downside target for the yen is seen around the 88.00 region.

Looking ahead, the Confederation of British Industry publishes Industrial Trends survey results at 6:00 am ET in the European session.

In the New York session, Canada retail and manufacturing sales data for September, U.S. Chicago Fed national activity index for September, existing home sales for September and U.S. Kansas Fed composite index for October are slated for release.

At 10:00 am ET, the European Commission publishes euro area consumer confidence survey results. The sentiment index is forecast to fall to -15.0 in October from -14.9 in September.