JPY & PHP - Markets & outlook
Japanese yen - JPY:
August 12, 2025
Key Market Factors Affecting the Japanese Yen (JPY):
1. Political Uncertainty: Prime Minister Shigeru Ishiba's declining support within the ruling Liberal Democratic Party (LDP) may delay key policy decisions, including the national budget and interest rate hikes. A potential leadership change could influence fiscal spending plans and monetary policy. (reuters.com)
2. Bank of Japan's Monetary Policy: The BOJ is considering resuming interest rate hikes due to mounting inflationary pressures. However, policymakers are cautious, citing external risks like U.S. tariffs and Japan's fragile economic recovery. (reuters.com)
3. U.S. Federal Reserve Policies: U.S. Treasury Secretary Scott Bessent emphasized the need for a forward-thinking Fed Chair capable of maintaining the Fed's independence amid its expanding role. This could influence U.S. monetary policy and, consequently, the USD/JPY exchange rate. (reuters.com)
4. Trade Relations and Tariffs: The U.S. has imposed tariffs on Japanese goods, including a 25% auto tariff, significantly impacting Japan's automotive sector. Ongoing trade negotiations and potential tariff adjustments remain critical for the JPY's outlook. (sucdenfinancial.com)
5. Global Risk Sentiment: Geopolitical tensions, such as the conflict between Russia and Ukraine and Middle East unrest, have led to increased demand for safe-haven assets like the JPY. However, investor caution amid global uncertainties may limit the Yen's appreciation. (voiceoftraders.com)
Hedge funds that bet the yen would materially weaken following last weekend’s Japanese election were left disappointed after prime minister Shigeru Ishiba announced he would stay on, despite his ruling coalition party losing control of the country’s upper house. Going into the election, investors had turned bearish on the yen, holding roughly $1.1 billion in short futures and options wagers against the currency, according to Commodity Futures Trading Commission’s commitments of traders report
These factors collectively influence the JPY's performance, with political developments, monetary policy decisions, trade relations, and global risk sentiment playing pivotal roles.
Philippine peso - PHP:
August 12, 2025
Key Market Factors Affecting the Philippine Peso (PHP):
1. Interest Rate Cut Anticipation: The Bangko Sentral ng Pilipinas (BSP) is expected to implement a key interest rate cut at its upcoming policy meeting on August 28, 2025, aiming to stimulate growth amid global economic uncertainties. (reuters.com)
2. Inflation Decline: Inflation dropped to 0.9% in July 2025—the lowest level since October 2019—bringing the average for the year to 1.7%. This trend supports expectations of further rate cuts. (reuters.com)
3. Strong Economic Growth: The Philippine economy expanded by 5.5% year-on-year in the second quarter of 2025, driven by a robust rebound in agriculture and strong household consumption. (reuters.com)
4. Trade Agreement with the U.S.: A new bilateral trade agreement between the Philippines and the United States, effective July 22, 2025, imposes a 19% tariff on Philippine exports, slightly lower than the initially proposed 20%. (en.wikipedia.org)
5. Investor Sentiment Shift: Investors have turned bullish on the Philippine peso, with long positions reaching a three-month high, as the U.S. dollar weakens amid concerns over U.S. trade policies. (reuters.com)
