USD/JPY falls 0.5% to 146.76

USD/JPY falls 0.5% to 146.76

The USD/JPY exchange rate fell by 0.5% to 146.76 on Monday, September 2, 2025, amidst political uncertainty in Japan and heightened expectations of a U.S. interest rate cut. The yen's decline was driven by the resignation of Japanese Prime Minister Shigeru Ishiba, which has created policy uncertainty in the world's fourth-largest economy [1].

The dollar's weakness was further accentuated by the U.S. jobs report released on Friday, which showed a significant decline in non-farm payrolls and an increase in the unemployment rate to nearly a four-year high of 4.3%. This report reinforced expectations that the Federal Reserve will resume cutting interest rates at its policy meeting later this month [1].

Analysts attribute the dollar's fall to the market's anticipation of a 50 basis-point rate cut, with Fed funds futures pricing in a 10% chance of such a move. Meanwhile, the yen's depreciation can be partly attributed to the possibility of a more accommodative fiscal and monetary policy in Japan, should a pro-loose policy advocate like Sanae Takaichi replace Ishiba [1].

The political turmoil in France, where the parliament voted to oust Prime Minister Francois Bayrou over its plans to tame the national debt, had little impact on the euro. The eurozone's second-largest economy faces deeper political crisis, but the euro remained relatively stable, up 0.2% against the dollar at $1.1751 [1].

Other currencies also saw fluctuations. Sterling edged up 0.3% against the dollar, while the Australian and New Zealand dollars rose 0.5% and 0.8%, respectively. The Swiss franc, on the other hand, saw the dollar fall to its lowest level since July 24 [1].

The U.S. Treasury Secretary, Scott Bessent, 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 [1].

References:
[1] Reuters. (2025, September 7). Yen falls on political uncertainty in Japan. Retrieved from https://www.reuters.com/world/middle-east/us-dollar-falters-rate-outlook-yen-retreats-amid-japan-uncertainty-2025-09-07/