USD/JPY steadies above 152.40 ahead of US consumer confidence data

• The US dollar remains firm above 152.40 on track to a 3.6% weekly rally.
• Growing political uncertainty in Japan has hit the Yen severely this week.
• In the US, consumer sentiment is expected to have deteriorated further in October.
  

The US Dollar stands tall above 152.40 against the Japanese Yen, consolidating gains after rallying beyond 3.5% this week. Growing political uncertainty following the victory of Sanae Takaichi at the ruling LDP party vote this week has triggered a sharp yen sell-off this week.

Investors remain concerned that Takaichi, an aide of former PM Shinzo Abe, might restore the Abenomics playbook, increasing fiscal spending and hampering the BoJ's monetary policy tightening plans.

Japan's ruling coalition, in danger

In this context, the leader of the Komeito party, Tetsuo Saito, threatened to leave the ruling coalition with the LDP earlier on Friday as, he said, there is a deep disagreement with the LDP "on issues involving money, politics."

Somewhat earlier, Japan's Finance Minister  Katsunobu Kato complained about one-sided rapid currency movements and affirmed that the Japanese authorities will monitor for excessive market fluctuations and disorderly moves, in a veiled threat of intervention.

The US Dollar, on the other hand, remains firm against its main peers, despite dovish comments from San Francisco Fed President, Mary Daly, who has called for further interest rate cuts as she considered that the deterioration of the labour market is worrisome.

Later today, the US Michigan  Consumer Sentiment Index is expected to give some more ammunition for Fed doves. The index is foreseen to have declined for the third consecutive week, to a level of 54.2 in October from 55.1 in September, with consumers wary about the poor job prospects.