USD/JPY gathers strength above 151.50 as BoJ rate hike uncertain

• USD/JPY strengthens to around 151.85 in Wednesday's early Asian session.
• Concerns about the fiscal outlook in Japan weigh on the Japanese Yen. 
• US government shutdown entered its eighth day as senators failed to pass spending proposals to reopen the federal government. 

The USD/JPY pair rises to near 151.85 during the early Asian session on Wednesday. The Japanese Yen (JPY) reached its weakest level since February against the US Dollar (USD) after Sanae Takaichi's surprise win as the new leader of Japan's ruling Liberal Democratic Party (LDP). The FOMC Minutes will be in the spotlight later on Wednesday. 

Japan's ruling party has elected Takaichi as its new leader, positioning the 64-year-old to be Japan's first female Prime Minister. Takaichi indicated she wants the Bank of Japan (BOJ) to proceed cautiously on a rate hike and favors close communication between the central bank and the government.

Her victory caused traders to reduce bets that the BoJ will raise interest rates this month, undermining the JPY and creating a tailwind for the pair. Money market traders are currently pricing in nearly a 26% odds that the BoJ will raise interest rates at its next policy meeting on October 30, down from around 60% before Takaichi's leadership victory, according to Bloomberg. 

On the other hand, the ongoing US government shutdown might drag the Greenback lower against the JPY. The Senate on Monday did not pass a House bill for a fifth time that would temporarily fund the US government, deepening the government funding stalemate. US President Donald Trump said that his administration would begin laying off federal workers if the shutdown persists beyond Monday.