Japanese Yen steadies around 158.00 as PM Takaichi vows debt containment

The Japanese Yen (JPY) nurses marginal losses against the US Dollar (USD) on Monday but remains trading within previous ranges, with downside attempts limited as Japanese Prime Minister Sanae Takaichi pledged to keep public debt under control. The USD/JPY is trading around 158.00 at the European session opening,with the broader bearish trend still intact as the US Dollar rallies across the board.

Prime Minister Sanae Takaichi promised that the government will control debt issuance and "scrutinise the economy, prices, tax revenues, interest rates, debt-servicing costs, and market developments”, in an extraordinary speech to the parliament, as Japan’s borrowing costs surged to record highs with the bond markets' turmoil worsening.

Takaichi also pledged a five-year investment plan that will be released by the end of the year, and vowed to “enhance market trust” in their policies by “communicating closely with the public, domestic and overseas players.”

Almost at the same time, the Japanese Cabinet Office revealed that Consumer Confidence ticked down to 35.4 in September from 35.5 in August, a tad better than the 35.3 reading expected by the market.

US Dollar remains bid amid the risk-off mood

In the US, Nonfarm Payrolls data disappointed on Friday and practically discarded any interest rate hike by the US Federal Reserve (Fed) in October. The US Dollar, however, maintains its bid tone, fuelled by its safe-haven status, as borrowing costs surge across the globe, with high oil prices fuelling inflationary pressures.

According to TD Securities, "September payrolls surprised to the downside last week, but the details showed underlying strength," as the moderation in job gains was "largely driven by seasonal factors — especially in leisure & hospitality." All in all, TD experts see the US labor market broadly resilient despite the monthly slowdown.

Later in the day, US "ISM services likely reversed its unexpected August gain, falling to a below-consensus 54.0 in September," and anticipates that "the recently strengthening new orders and activity components" will "lead the reversal," say TD Securities in a note.