EUR/JPY falls to near 175.50 due to increased safe-haven demand

• EUR/JPY moves little following the release of Japan's weaker Industrial Production data for August on Wednesday.
• The Japanese Yen advances as safe-haven demand rises on US-China trade tensions.
• French Prime Minister Sebastien Lecornu suspended the landmark 2023 pension reform to ease the prolonged political turmoil.

EUR/JPY depreciates after registering little gains in the previous session, trading around 175.70 during the Asian hours on Wednesday. The currency cross loses ground as the Japanese Yen (JPY) remains stronger following the release of Japan's Industrial Production data for August, which declined by 1.6% year-over-year in August, following the previous decline of 1.3%. Meanwhile, the monthly production fell 1.5%, against the 1.2% decline prior. Attention has shifted toward preliminary Eurozone Industrial Production data for the same month, due later in the day.

The Japanese Yen received support from increased safe-haven demand, driven by the ongoing feud between the United States (US) and China. President Donald Trump criticized China on Wednesday for its recent protectionist trade policies, threatening additional targeted trade restrictions if China proceeds with imposing new rare earth mineral export controls and increased port fees for foreign container ships in Chinese ports. Beijing also announced sanctions against five US-linked subsidiaries of South Korean shipbuilder Hanwha Ocean.

Traders turned cautious as Japan's ruling Liberal Democratic Party leader, Sanae Takaichi, is set to become the next prime minister following the coalition's split with the Komeito party. Takaichi, known for her support of Abenomics-style expansionary policies, has fueled expectations of increased fiscal spending and continued loose monetary policy. Meanwhile, opposition parties are holding discussions in an effort to secure enough support to form a new government.

French Prime Minister Sebastien Lecornu has announced the suspension of the landmark 2023 pension reform until after the 2027 presidential election, aiming to ease the prolonged political turmoil in the country. Lecornu said that "I will propose to parliament this autumn that we suspend the 2023 pension reform until the presidential election. There will be no increase in the retirement age from now until January 2028."