Mounting Election Woes and Trade Tensions Pressure the Yen

The yen slid Thursday as concerns mounted around Japan's pivotal election and elusive trade negotiations with the U.S. The currency nearly hit a one-year low against the euro amid fears of Prime Minister Shigeru Ishiba's coalition losing its upper house majority. President Trump's denial of plans to dismiss Federal Reserve Chair Jerome Powell provided only marginal relief to the dollar.

Japan's chief trade negotiator conversed with U.S. Commerce Secretary Howard Lutnick as Japan struggles with the effects of prolonged tariffs. In June, exports fell for a second consecutive month, showing the tangible impact of these tariffs. Analyst Bart Wakabayashi noted the election's critical influence on the yen's perception in foreign markets.

Investors are focusing on tariffs with an August 1 deadline approaching fast. Failing to secure a U.S. trade deal post a July 9 temporary tariff halt adds to Japan's economic pressure, evidenced by a 0.5% drop in June's exports. Prime Minister Ishiba is scheduled to discuss trade with U.S. Treasury Secretary Scott Bessent, amidst domestic and international uncertainties.

(With inputs from agencies.)