✅ This Week: Yen Weakness Dominates — Markets Eye U.S. CPI for Direction
💴 Yen Weakness Accelerates on Expectations for Takaichi’s Economic Policies
The yen continues to depreciate this week, fueled by optimism surrounding the newly inaugurated Takaichi administration’s pro-growth policies.
In her policy speech today, Prime Minister Sanae Takaichi emphasized:
“Economic growth will be our top priority.”
Meanwhile, Finance Minister Katayama stated that fiscal policy rules would shift focus from the primary balance to the debt-to-GDP ratio, signaling a move toward fiscal expansion.
Following these remarks, the USD/JPY climbed from the mid-¥152 range to just below ¥153, with traders increasingly associating “Takaichi = fiscal stimulus + continued monetary easing.”
This reinforced a clear yen-selling bias across the market.
💵 U.S. CPI: The Key Event That Could Break the Calm
Later today, the U.S. September CPI will be released — the key inflation gauge before the next FOMC meeting, especially as many U.S. economic indicators remain delayed due to the government’s partial shutdown.
Market expectations:
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MoM: +0.4% (previous +0.4%)
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YoY: +3.1% (previous +2.9%)
While markets still price in a 25bp rate cut, an in-line result would likely yield muted price action, whereas a hotter print could reignite USD buying and further yen selling.
A soft reading, on the other hand, could trigger a temporary dollar correction.
CPI is set to be the decisive event for market direction in the latter half of the week.
🇪🇺 Europe & U.K.: PMI Data Hold Up
This week’s preliminary PMI releases for France, Germany, the Eurozone, the U.K., and the U.S. are in focus.
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The U.K. PMI beat forecasts across both manufacturing and services, sparking brief pound buying.
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However, GBP/USD remains stuck in a tight 1.3300–1.3330 range, with limited momentum.
Overall, European currencies continue to trade sideways with little direction.
💬 Quiet Market Amid Blackout Periods
Bundesbank President Nagel and Banque de France Governor Villeroy de Galhau are scheduled to speak at separate events,
but both the ECB and FOMC are currently in blackout periods, limiting market-moving commentary.
Corporate earnings in the U.S. — from Intel, T-Mobile, Ford, and Blackstone — are also in focus.
Strong results could bolster equities, potentially supporting risk-on yen selling.
💹 Market Snapshot (London Session)
During London hours, the USD/JPY holds firm around the mid-152s, near its recent highs.
EUR/USD trades sideways near 1.1600, while EUR/JPY hovers around the upper 176s.
The Dollar Index stands at 99.05 (+0.11%), showing limited direction.
| Pair | Current | Comment |
|---|---|---|
| USD/JPY | 152.93 | Yen selling continues on Takaichi optimism |
| EUR/USD | 1.1603 | Range-bound ahead of CPI |
| GBP/USD | 1.3322 | PMI beat, but rebound capped |
| GBP/JPY | 203.77 | Rising on both yen weakness and pound rebound |
✅ Summary
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The Takaichi administration’s pro-growth stance fuels continued yen selling.
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The U.S. CPI is the key directional trigger:
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In-line → Range consolidation
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Above expectations → USD/JPY surge beyond 153
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Below expectations → Temporary pullback
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The USD/JPY aims for a 153 test, but traders remain cautious of post-event volatility.
Overall, markets maintain a yen-weak bias, yet participants are turning more cautious as the CPI approaches — the event that could define the week’s trend.
