USD/JPY weakens to near 147.50 after Fed's Powell speech

• USD/JPY softens around 147.60 in Wednesday's early Asian session. 
• Fed's Powell said slowing labor market prompted rate cut. 
• Domestic political uncertainty could undermine the Japanese Yen and help limit the pair's losses. 

The USD/JPY pair declines to near 147.60 during the early Asian session on Wednesday. The US Dollar (USD) remains weak against the Japanese Yen (JPY) as traders continue to assess different comments from Fed officials, while key gauges of US business activity disappointed investors somewhat. Later on Wednesday, the US August New Home Sales data will be released. 

Fed Chair Jerome Powell said on Tuesday that weakness in the labor market is outweighing concerns about stubborn inflation, leading to a decision he backed to cut the key interest rate at its September meeting last week. However, Powell further stated that he is comfortable with the current policy path, though he indicated the possibility of further cuts should the FOMC see the need to be more accommodative. 

Money markets are currently pricing in nearly a 90% possibility of a Fed rate cut in October, down slightly from 92% a day earlier, according to the CME FedWatch tool.

On the other hand, political uncertainty in Japan following Japan's Prime Minister Shigeru Ishiba's resignation could weigh on the JPY and create a tailwind for the pair. A Liberal Democratic Party (LDP) leadership election will take place on 4 October, and the outcome could affect the likely timing of the next rate hike by the Bank of Japan (BoJ) if a candidate with dovish views is selected.