FX.co ★ Yen Strengthens as Ishiba Maintains Leadership

The Japanese yen stabilized at approximately 147.5 per dollar on Tuesday after appreciating roughly 1% in the previous session. Investors continued to assess the implications of the weekend's electoral results. Although the ruling coalition lost its majority in the upper house, the outcome was largely anticipated by the markets. Importantly, Prime Minister Shigeru Ishiba is likely to remain in office, alleviating concerns about political instability or an abrupt resignation. Ishiba reaffirmed his dedication to facilitating ongoing tariff discussions with the United States and managing other significant policy issues. Meanwhile, opposition parties are anticipated to advocate for enhanced fiscal stimulus and tax reductions, initiatives that could further depreciate the yen and elevate government bond yields to multi-year records. On the trade negotiations front, Japan's principal negotiator, Ryosei Akazawa, expressed on Monday his continued goal to finalize an agreement with the U.S. by the August 1 deadline despite the electoral challenges.