USD/JPY slumps below 151.00 amid ongoing US-China trade tensions

• USD/JPY faces some selling pressure near 150.85 in Thursday's early Asian session. 
• Trump said the US is in a trade war with China; Bessent floated a long truce. 
• Political uncertainty in Japan might cap the JPY's upside. 

The USD/JPY pair tumbles to around 150.85 during the early Asian session on Thursday. The US Dollar (USD) weakens against the Japanese Yen (JPY) due to the continuing trade tensions between the US and China. The Federal Reserve (Fed) officials are set to speak later on Thursday, including Michael Barr, Stephen Miran, Christopher Waller and Michelle Bowman. 

US President Donald Trump said on Wednesday that he saw the US is in a trade war with China, even as Treasury Secretary Scott Bessent proposed a longer pause on high tariffs on Chinese goods to resolve a conflict over critical minerals. Concerns over escalating trade tensions between the world's two largest economies could boost the safe-haven currencies like the JPY and act as a headwind for the pair. 

Traders assess comments from Fed Chair Jerome Powell for more cues on upcoming rate cuts amid a US government shutdown, which has hampered the timely release of key data. On Tuesday, Powell left the door open to rate cuts by saying the US labor market remained mired in low-hiring, low-firing doldrums. He said the absence of official economic data due to the government shutdown has not prevented policymakers from being able to assess the economic outlook, at least for now.

On the other hand, the growing speculation that the political uncertainty in Japan could put pressure on the Bank of Japan (BoJ) to delay interest rate hikes further could weigh on the JPY. The Liberal Democratic Party (LDP)-Komeito coalition came to an abrupt end last week. The development means the newly elected LDP leader, Sanae Takaichi, would need support from other parties to confirm her as Japan's first female Prime Minister and for her key policies.