FX.co ★ Japanese Yen Rises After Upper House Election

The Japanese yen strengthened, nearing 148 per dollar on Monday, as it partially recovered from last week's downturn following the ruling coalition's loss of its upper house majority in the recent weekend election, injecting a fresh dose of political uncertainty. Prime Minister Shigeru Ishiba is now tasked with navigating a new political landscape by collaborating with the opposition, an unprecedented situation since 1955 where the governing party didn't command a majority in at least one legislative chamber. The opposition is anticipated to push for heightened government spending and tax rebates, which could exert downward pressure on the yen and elevate Japanese government bond yields to levels not seen in years. Additionally, trade dynamics lent support to the yen, as US Commerce Secretary Howard Lutnick reiterated that August 1 remains a firm deadline for countries to commence tariff payments, despite ongoing negotiations expected up until that date.