Japanese Yen drops as no candidate secures majority in the first round of LDP voting

27 Sep 2024, 03:16 by Akhtar Faruqui · FXStreet

The Japanese Yen loses ground after the release of Tokyo CPI inflation data on Friday.
No candidate has secured a majority in the first round of the Liberal Democratic Party's presidential election.
The US Dollar receives downward pressure from dovish Fedspeak.

The Japanese Yen (JPY) extends its downside for the third successive session following the Tokyo Consumer Price Index (CPI) data released on Friday. The JPY faces challenges as traders expect the BoJ to ponder before further rate hikes.

The Tokyo Consumer Price Index (CPI) increased 2.2% year-over-year in September, down from a 2.6% rise in August. Meanwhile, the CPI excluding fresh food and energy climbed 1.6% YoY in September, unchanged from the previous reading. The CPI excluding fresh food increased 2.0% as expected, compared to the previous rise of 2.4%.

The US Dollar could face pressure following dovish remarks from Federal Reserve officials. Traders are now expected to closely monitor the US Personal Consumption Expenditures (PCE) Price Index data for August, the Fed’s preferred inflation indicator, on Friday for fresh impetus, which is scheduled for release later in the North American session.

Daily Digest Market Movers: Japanese Yen extends losses amid doubts over BoJ policy outlook

In the first round of the Liberal Democratic Party's (LDP) presidential election, top candidates included former Defense Chief Shigeru Ishiba, former Environment Minister Shinjiro Koizumi, and Economic Security Minister Sanae Takaichi, who secured 154, 136, and 181 votes, respectively. The needed majority was supposed to be 368 votes. This means that Ishiba and Takaichi will now face off in the run-off vote.
According to Reuters, Fed Governor Lisa Cook stated on Thursday that she supported last week's 50 basis points (bps) interest rate cut, citing increased "downside risks" to employment.
US Gross Domestic Product Annualized increased at a rate of 3.0% in the second quarter, as previously estimated, according to the US Bureau of Economic Analysis (BEA) on Thursday. Meanwhile, the GDP Price Index rose 2.5% in the second quarter.
US Initial Jobless Claims for the week ending September 20 were reported at 218K, according to the US Department of Labor (DoL). This figure came in below the initial consensus of 225K and was lower than the previous week's revised number of 222K (previously reported as 219K).
On Thursday, the BoJ Monetary Policy Meeting Minutes expressed the members’ consensus on the importance of remaining vigilant regarding the risks of inflation exceeding targets. Several members indicated that raising rates to 0.25% would be suitable as a way to adjust the level of monetary support. A few others suggested that a moderate adjustment to monetary support would also be appropriate.
Federal Reserve Governor Adriana Kugler said on Wednesday that she “strongly supported” the Fed’s decision to cut the interest rates by a half point last week. Kugler further stated that it will be appropriate to make additional rate cuts if inflation continues to ease as expected, per Bloomberg.
US Consumer Confidence Index fell to 98.7 in September from a revised 105.6 in August. This figure registered the biggest decline since August 2021.
On Tuesday, BoJ Governor Kazuo Ueda indicated that the central bank has time to evaluate market and economic conditions before making any policy adjustments, signaling that there is no urgency to raise interest rates again. Ueda also noted that Japan's real interest rate remains deeply negative, which is helping to stimulate the economy and drive up prices.

Technical Analysis: USD/JPY holds position above 145.00, nine-day EMA

USD/JPY trades around 145.10 on Friday. Analysis of the daily chart shows that the pair is moving upwards within an ascending channel, indicating a bullish bias. Additionally, the 14-day Relative Strength Index (RSI) remains slightly above the 50 level, confirming an emergence of a bullish sentiment.

On the upside, the ongoing bullish bias could lead the USD/JPY pair may explore the region around the upper boundary of the ascending channel at 146.90 level, followed by its five-week high of 147.21 level, which was recorded on September 3.

In terms of support, the USD/JPY pair may test the nine-day Exponential Moving Average (EMA) at the level of 143.89, aligned with the lower boundary of the ascending channel.

USD/JPY: Daily Chart

Japanese Yen PRICE Today

The table below shows the percentage change of the Japanese Yen (JPY) against listed major currencies today. The Japanese Yen was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.13%	0.26%	1.05%	0.21%	0.35%	0.43%	0.27%
EUR	-0.13%		0.12%	0.91%	0.04%	0.22%	0.29%	0.16%
GBP	-0.26%	-0.12%		0.80%	-0.07%	0.10%	0.19%	0.03%
JPY	-1.05%	-0.91%	-0.80%		-0.86%	-0.70%	-0.62%	-0.73%
CAD	-0.21%	-0.04%	0.07%	0.86%		0.13%	0.24%	0.08%
AUD	-0.35%	-0.22%	-0.10%	0.70%	-0.13%		0.10%	-0.07%
NZD	-0.43%	-0.29%	-0.19%	0.62%	-0.24%	-0.10%		-0.15%
CHF	-0.27%	-0.16%	-0.03%	0.73%	-0.08%	0.07%	0.15%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Economic Indicator

Personal Consumption Expenditures - Price Index (YoY)

The Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The YoY reading compares prices in the reference month to a year earlier. Price changes may cause consumers to switch from buying one good to another and the PCE Deflator can account for such substitutions. This makes it the preferred measure of inflation for the Federal Reserve. Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.