FX.co ★ Yen Eases as Powell’s Caution Lifts Dollar

As of Wednesday, the Japanese yen weakened to approximately 148 per dollar, losing the gains it achieved earlier in the week. This shift occurred as the dollar appreciated following a cautious approach by US Federal Reserve Chair Jerome Powell regarding future policy easing. Powell indicated that the path for rate cuts remains uncertain, highlighting the dual challenges of managing inflation and supporting a softening labor market. Domestically, Japan's manufacturing sector experienced its most significant contraction in six months in September, while the growth in the services sector slowed to its lowest point in three months. Businesses continue to express concern about the prospects amid domestic uncertainty and evolving global trade policies. Moving forward, investors are focused on upcoming Tokyo inflation data and the release of the Bank of Japan’s July meeting minutes for hints on future policy direction. Politically, the ruling Liberal Democratic Party is set to select a new leader on October 4 to succeed the outgoing Prime Minister, Shigeru Ishiba.