Yen holds steady ahead of US inflation data

The Japanese yen steadied around 147.3 per dollar on Wednesday, consolidating after sharp fluctuations earlier in the week as traders awaited key US inflation figures that could shape the Federal Reserve’s policy decision next week.

Recent downward revisions to US payroll data have reinforced market bets on an imminent rate cut, with some participants now speculating that the Fed may opt for an aggressive 50 basis point reduction if inflation shows further signs of easing.

The move in US policy expectations has kept dollar-yen trading choppy, with investors balancing softer US fundamentals against Japan’s still-ultra-loose monetary stance.

Domestically, sentiment was lifted by a private survey showing that Japanese manufacturers turned more optimistic in September, with confidence climbing to its highest level in more than three years.

The survey highlighted improving export orders and reduced trade headwinds following the recently concluded tariff agreement with the US, which helped alleviate some of the pressure on industrial supply chains. Stronger business sentiment suggested that the corporate sector may be better positioned to weather external uncertainties, even as global demand remains uneven.

On the political front, markets continued to digest the resignation of Prime Minister Shigeru Ishiba, who stepped down amid widening divisions within the ruling party and persistent pressure after last year’s electoral defeat.

The political vacuum has added an element of uncertainty to Japan’s policy outlook, though investors are closely watching for signs of continuity in fiscal and structural reforms under potential successors.