- The USD / JPY is down more than 1% on Friday.
- Japanese Prime Minister Shinzo Abe announces his resignation due to health concerns.
- The dollar remains under strong selling pressure on the Fed’s new policy strategy.
USD / JPY fell sharply at the end of the Asian session and extended its slide for the rest of the day to hit its lowest level since August 19 at 105.21. As of this writing, the pair is down 1.18% on a daily basis to 105.30 and remains on track to close the second week in a row in negative territory.
USD risk aversion and weakness double whammy weighs on USD / JPY
Earlier today, Japanese Prime Minister Shinzon Abe announced his resignation over health concerns and this development triggered risk-free flows, boosting demand for the safe haven JPY. In a speech on Friday, Abe noted that he will continue to carry out his responsibilities until a new PM is approved and noted that they will continue to tap into the emergency budget reserve to fund new responses. viruses.
Meanwhile, widespread selling pressure around the USD following the Federal Reserve’s announcement of a new policy strategy has pushed the pair to continue lower.
In his speech at the Jackson Hole Symposium on Thursday, FOMC Chairman Jerome Powell said the Fed would target average inflation and prioritize jobs over inflation. This accommodative change in the Fed’s policy outlook took the US dollar index to its lowest level in more than a week at 92.20.
US data on Friday showed personal spending and personal income both increased more than expected in July, but the impact on the US dollar was short-lived. Right now, the US dollar index is down 0.65% on the day to 92.39.