Yen Bounces Back on Ishiba's Victory
The Japanese yen rallied on Friday after Shigeru Ishiba, a critic of past monetary stimulus, won the leadership contest of Japan's ruling party. This positions him to become the next prime minister.
Ishiba's victory surprised markets, which had expected a win by Sanae Takaichi, a hardline nationalist opposed to further rate hikes. The yen gained 1%, reaching 143.44 yen per dollar.
Ishiba's support for the central bank's recent rate hikes is seen as paving the way for further increases. This is likely welcomed by policymakers at the Bank of Japan.
Meanwhile, the euro fell against the yen and the dollar after data showed lower-than-expected inflation in France and Spain, increasing bets on an October rate cut from the European Central Bank.
China's ongoing stimulus measures continued to boost risk appetite, lifting stocks, commodities, and risk-sensitive currencies.
The British pound remained near its recent high, while the Australian and New Zealand dollars held near multi-year highs due to China's stimulus plans.
The dollar remained under pressure as traders priced in further easing for the rest of the year. The Federal Reserve's recent shift in focus from inflation to the labor market contributed to the dollar's weakness.
Investors will monitor the personal consumption expenditures price index due later on Friday, but analysts do not anticipate significant changes in market pricing for U.S. rates unless the data deviates significantly from expectations.