Japanese yen struggles to maintain gains ahead of Sunday’s elections
Japanese yen struggles to maintain gains ahead of Sunday’s elections
In early Asian trading hours, the Japanese yen made several attempts to continue its recovery from the three-month low of 153.20 reached earlier this week. However, it appears to have exhausted its potential.
Currently, the yen is trading in a narrow range around the 152.00 area, with Friday’s statistical data providing little support for the currency against the U.S. dollar.
According to Japan's Statistics Bureau, the core Consumer Price Index (CPI) increased by 1.8% year-on-year in October, down from 2.2% the previous month.
The core CPI, excluding fresh food prices, rose by 1.8% this month, below September’s 2% but slightly above market expectations of 1.7%. Another inflation index, excluding food and energy, rose by 1.8% compared to 1.6% in September, still below the Bank of Japan's (BoJ) 2% target.
Earlier data revealed a contraction in Japan’s manufacturing and services sectors, while core inflation falling below the BoJ’s 2% target has softened expectations for further rate hikes later this year.
Politics drive the circumstances
Additional pressure on the yen comes from political uncertainty ahead of the parliamentary elections scheduled for this Sunday. However, recent government statements regarding the inadmissibility of excessive volatility should deter JPY bears from placing new bets.
From a technical perspective, weakening to the 151.60–151.55 area will likely push the yen toward the 151.00 mark. On the other hand, momentum above 152.00 could extend gains to the 152.60-152.65 range and potentially reach 153.00.
Notably, the Japanese government continues to monitor currency movements closely, including speculative actions, and has concluded that the yen's recent decline lacks economic justification.
