USD/JPY steadies around 153.00 as Yen extends six-day losing streak

• The Japanese Yen weakens for a sixth straight day as USD/JPY holds near 153.00.
• Political developments in Japan and Europe drive renewed demand for the US Dollar.
• Prolonged US shutdown clouds growth outlook, reinforcing prospects of further interest rate cuts by the Fed.

The Japanese Yen (JPY) remains under pressure against the US Dollar (USD) on Thursday, extending losses for a sixth consecutive day as risk flows keep the pair supported. At the time of writing, USD/JPY is consolidating around 153.00, following volatile intraday moves that briefly pushed the pair down to 152.11 before buyers stepped back in to defend the downside.

The Yen's decline comes as investors continue to favor the Greenback amid political uncertainty in Japan and Europe. The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades near a two-month high around 99.50, up roughly 1.8% this week, reflecting safe-haven demand and FX allocation shifts away from the Euro (EUR) and the Yen.

In Japan, political developments are weighing heavily on sentiment after Sanae Takaichi, the newly elected leader of the ruling Liberal Democratic Party (LDP) and poised to become the next Prime Minister, made remarks emphasizing coordination between the government and the Bank of Japan (BoJ).

In her comments on Thursday, Takaichi said the BoJ is responsible for monetary policy but that "any decision it makes must align with the government's goals." She added that she sees no immediate need to revise the BoJ-government joint accord.

Takaichi stressed there is "no intention of triggering an excessively weak Yen" and declined to comment on the possibility of a near-term BoJ rate hike. When asked about fading market expectations for an October move, she stressed that Japan "must achieve demand-led inflation" but that current price pressure remains largely cost-driven, signaling support for maintaining accommodative conditions for now.

Her comments reinforced expectations that the BoJ may delay further tightening, even as some board members have shown hawkish leanings. Markets now see little scope for a BoJ to raise interest rates at the October 30 meeting, with the next adjustment likely delayed until December or early 2026.

In the United States (US), attention remains fixed on the prolonged government shutdown, now entering its ninth day, which continues to cloud the near-term economic outlook. The longer the impasse drags on, the greater the risk to overall activity, as key data releases face delays and federal agencies scale back operations.

With the labor market already showing signs of cooling, an extended shutdown could further weigh on employment conditions and business sentiment, reinforcing expectations that the Federal Reserve (Fed) will move ahead with additional rate cuts this year to cushion growth.