Yen Jumps With Abe’s Resignation Causing a Political Blurry

The yen jumped from its lowest level in two weeks, following news that Japanese Prime Minister Shinzo Abe is preparing to resign, while the dollar is struggling to make progress against other currencies as prospects for a prolonged low US interest rate weigh on the currency.

A source close to an official in the ruling party told Reuters that Abe, the longest serving prime minister in the country, will step down due to his deteriorating health.

And there was speculation about his health throughout the week.

The Yen rose 0.5% to a session high of 106.10 per dollar on headlines, before retreating slightly to 106.32.

The yen is considered a safe-haven currency thanks to Japan’s position as the world’s largest creditor. Analysts say he was jumped by news of Abe’s resignation because political uncertainty could spur Japanese companies into bringing their money into the country and converting it into yen.

The dollar faced pressure in Asia after a speech by Federal Reserve Chairman Jerome Powell in which he said that the central bank will adopt a medium target for inflation, which means that interest rates will likely remain low even if inflation rises slightly in the future.

The dollar was supported in early trade in the Asian session from an overnight jump in US Treasury yields, as the market took into account higher inflation.

But as the session progressed, investors turned to selling the dollar again, as they believe that US interest rates will remain low for a long time and will remain so even if inflation rises.

The Australian dollar rose 0.5% to its highest level in 20 years at $ 0.7303, and the New Zealand dollar rose at the same pace to $ 0.6668.

The euro added 0.4% to $ 1.1867, as investors seemed to ignore a rise in US returns to sell the dollar. The pound rose half a percent to $ 1.3260.