USD/JPY holds near nine-month highs as Japan's fiscal stance weighs on Yen

• The Japanese Yen remains pressured even as the US Dollar softens, with USD/JPY hovering near nine-month highs.
• PM Takaichi reiterates commitment to fiscal support as Japan seeks to sustain its fragile recovery.
• In the US, focus shifts to the House vote to end the record-long government shutdown and rising odds of a December Fed rate cut.

The Japanese Yen (JPY) remains under pressure against the US Dollar (USD) on Wednesday, with USD/JPY hovering near nine-month highs around 154.64, despite a broadly softer Greenback. The Yen continues to face headwinds as Japan's expansionary fiscal stance and the Bank of Japan's (BoJ) cautious approach to monetary policy normalization weigh on the currency.

During Wednesday's meeting of the Council on Economic and Fiscal Policy, Prime Minister Sanae Takaichi reiterated her commitment to supporting Japan's fragile recovery through an expansive fiscal approach. Private-sector members reportedly urged the government to compile a supplementary budget exceeding ¥14 trillion, arguing that additional spending is needed to offset slowing domestic demand and weak wage growth.

Takaichi also called on Bank of Japan Governor Kazuo Ueda to provide regular policy updates to the council, highlighting closer coordination between fiscal and monetary authorities. She reiterated that Japan cannot yet claim to have fully emerged from deflation, warning that "with incorrect policies, there is a risk Japan could slide back," which would hurt consumption and investment.

Meanwhile, Japanese officials continued to voice concern over the Yen's persistent weakness, though without signaling imminent action. Finance Minister Shunichi Suzuki said the government is watching currency moves with "a high sense of urgency."

In the United States, attention remains firmly on the House of Representatives' vote scheduled for later on Wednesday to end the record-long government shutdown. While progress toward reopening the government and restoring federal operations briefly lent support to the Greenback, the move proved short-lived, with the Dollar easing again as traders focus on growing expectations of another Federal Reserve (Fed) rate cut in December.

According to a Reuters poll published earlier in the day, 84 of 105 economists expect the Fed to lower the federal funds rate by 25 basis points to a 3.50%-3.75% range at its December 10 meeting.