Currency Shake-Up: Yen Falls Amid Political Turmoil and Fed Rate Expectations

The Japanese yen suffered significant losses on Monday after Prime Minister Shigeru Ishiba announced his resignation. The currency declined by 0.6% against the dollar and hit yearly lows against the euro and sterling. Political uncertainties continue to loom over Japan's economy, the world's fourth largest.

This instability comes as markets anticipate a potential rate cut by the Federal Reserve following weak U.S. jobs data. The nonfarm payrolls report revealed sharp fallbacks in job growth, prompting increased bets for a significant rate reduction by the Fed later this month.

In response to Ishiba's resignation, Japan's political landscape remains uncertain, causing volatility in currencies, bonds, and equities. Investors are eagerly awaiting the election of a new leader who may adopt looser fiscal and monetary policies, potentially impacting the yen's future movements.