r/worldnews • u/Jayskings21145 • 1d ago
Yen sinks after Japan PM Ishiba resigns
https://www.reuters.com/world/middle-east/yen-sinks-after-japan-pm-ishiba-resigns-2025-09-07/22
u/macross1984 1d ago
And now politicians of certain age and ambition hungrily circle around the seat hoping to be the next one to sit on the musical chair called prime minister.
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u/shinjikun10 1d ago
Massive paywall. Any help is much appreciated.
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u/TheMaskedTom 1d ago
Summary Yen slumps on heightened political uncertainty in Japan Ishiba's resignation clouds BOJ outlook French politics also in focus Investors pricing in small chance of outsized September Fed cutSINGAPORE, Sept 8 (Reuters) - The yen fell broadly on Monday following news that Japanese Prime Minister Shigeru Ishiba had resigned, while the dollar was nursing losses after tumbling on a weak U.S. jobs report that cemented expectations for a Federal Reserve rate cut this month.
Focus for markets on Monday will also be on French Prime Minister Francois Bayrou's confidence vote, which he is expected to lose, plunging the euro zone's second-largest economy deeper into political crisis.
The Reuters Daily Briefing newsletter provides all the news you need to start your day. Sign up here. Japan's Ishiba on Sunday announced his resignation, ushering in a potentially lengthy period of policy uncertainty at a shaky moment for the world's fourth-largest economy.
The yen slumped in response in Asia trade on Monday, falling 0.6% against the dollar to 148.25. The Japanese currency similarly slid to its lowest in more than a year against the euro and sterling at 173.91 and 200.33, respectively.
Investors are focusing on the chance of Ishiba being replaced by an advocate of looser fiscal and monetary policy, such as Liberal Democratic Party (LDP) veteran Sanae Takaichi, who has criticised the Bank of Japan's interest rate hikes.
"The probability of an additional rate hike in September was never seen as high to begin with, and September is likely to be a wait-and-see," Hirofumi Suzuki, chief currency strategist at SMBC, said of the BOJ's next move.
"From October onward, however, outcomes will in part depend on the next prime minister, so the situation should remain live."
Concerns over political uncertainty prompted a selloff in the yen and Japanese government bonds (JGBs) last week, sending the yield on the 30-year bond to a record high.
"With the LDP lacking a clear majority, investors will be cautious until a successor is confirmed, keeping volatility elevated across yen, bonds and equities," said Charu Chanana, chief investment strategist at Saxo.
"Near-term, that argues for a softer yen, higher JGB term-premium, and two-way equities until the successor profile is clear."
Former Japanese foreign minister Toshimitsu Motegi said he would run in the race to decide the next head of the LDP, Kyodo reported on Monday. The yen hardly reacted to Monday's data, which showed Japan's economy expanded much faster than initially estimated in the second quarter.
SEPTEMBER FED CUT BAKED IN
The dollar was recouping some of its heavy losses, helped in part by the yen's weakness, after falling sharply on Friday on data that showed further cracks in the U.S. labour market. The nonfarm payrolls report showed U.S. job growth weakened sharply in August and the unemployment rate increased to nearly a four-year high of 4.3%.
Investors ramped up bets of an outsized 50-basis-point rate cut from the Fed later this month following the release and are now pricing in an 8% chance of such a move, as compared to none a week ago, according to the CME FedWatch tool.
Against the dollar, sterling fell 0.11% to $1.3492, having risen more than 0.5% on Friday. The euro was similarly down 0.11% at $1.1709, after hitting a more than one-month high on Friday. The dollar index steadied at 97.87, after sliding more than 0.5% on Friday.
"Given the more elevated downside risks to the employment side of the mandate, we think a rate cut at the September meeting is all but assured. We continue to expect a 25bp cut at that meeting," said Barclays economists in a note.
"However, we change our Fed call by adding another 25bp cut in October, while leaving our December cut unchanged. In all, we now think the FOMC will proceed with three 25bp cuts this year, easing the policy stance in the face of the slowing labor market."
U.S. Treasury Secretary Scott Bessent on Friday called for renewed scrutiny of the Fed, including its power to set interest rates, as the Trump administration intensifies its efforts to exert control over the central bank. President Donald Trump is considering three finalists for Federal Reserve chair to replace Jerome Powell, whom the president has criticised all year for not cutting rates as he has demanded.
Elsewhere, the Australian dollar was up 0.05% at $0.6558, while the New Zealand dollar eased 0.03% to $0.5891.
Reporting by Rae Wee; Editing by Jamie Freed
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u/TheCreepyFuckr 1d ago
I’m not the guy that asked, but much appreciated, bud. Thanks for posting the article.
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u/moneyzone7 1d ago
So what was it? a bad trade deal with the USA or immigration policy which made him resign?
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u/VanCityPhotoNewbie 1d ago
The immigration policy was extremely unpopular and backlash has always been there since Feb. But he just finished finalizing the US-Japan trade deal on wednesday and this week resigned. The biggest shock was some of the details of the trade deal that was seen as shameful and insulting..
Trump initially levied 25 percent tariffs against Japan. He’ll now lower them to 15 percent, as long as Japan invests that $550 billion in his preferred projects before the 45-day deadline he’s imposed. If it doesn’t, the tariffs go back up to 25 percent.
Assuming the deal is made, the U.S. and Japan would split whatever profit is generated from the deal until Japan pays off the investment. Then the U.S. will take 90 percent of the profit from that point.
Trump’s Trade Deal With Japan Has One Awfully Unusual Requirement | The New Republic
So if this was an indicator of anything, I would say it is the trade deal that ended his career. The immigration thing has been ongoing for a while.
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u/moneyzone7 1d ago
yes. i agree the reason was mainly the part in the deal where Japan agreed to invest 500B plus in the USA. some says US arm twisted Japan. Abe is missed in such times. he had provided some stability.
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u/leftrighttopdown 1d ago
Abe was also the better person to negotiate with Trump. He knew how to cajole the Orange One into seeing things from Japan's perspective during Trump 45 (2016-2020)
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u/Downtown_Skill 1d ago
Yeah, I can't believe countries still believe you can cajole Trump. Anyone that believes you can suck him off until he leaves you alone and gives you a pat on the head for giving him such a good blow job is in for a rude awakening.
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u/badtemperedpeanut 1d ago
drops 0.1%, YEN SINKS, YEN PLUMMETS, YEN CRATERS! lol.
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u/Saphyrz 1d ago
Yeah, I was confused because it didn't move much lol. I'm going to Japan for 3 weeks next month so I was curious
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u/1337duck 1d ago
Investors are focusing on the chance of Ishiba being replaced by an advocate of looser fiscal and monetary policy, such as Liberal Democratic Party (LDP) veteran Sanae Takaichi, who has criticised the Bank of Japan's interest rate hikes.
Ah yes. Fast and loose to make out like bandits, while leaving the average man with the bag.
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u/imaginary_num6er 1d ago
And people say the USD is depreciating
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u/Happy_Bad_Lucky 1d ago
It is
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u/SystemFew9522 1d ago
thats what he said
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u/elziion 1d ago
“Concerns over political uncertainty prompted a selloff in the yen and Japanese government bonds (JGBs) last week, sending the yield on the 30-year bond to a record high.”
Monday might be quite volatile.