Last week, President Trump showed lawmakers a draft proposal to dismiss Fed Chairman Powell, raising speculation about Powell’s dismissal and causing the dollar to plummet to 146.90 yen at one point. However, this was also considered to be a so-called ‘TACO’ and the dollar returned to the upper 148 yen range.
Mr. Hasse is likely to become the next Fed chairman, but will it be possible to cut interest rates if inflation really starts to rise? The dollar is slowly being bought back, but since the dollar has been selling since April, it may now be entering a period of adjustment where it is being bought back.

In Japan, the ruling coalition was expected to lose in the Upper House election. The opposition parties, namely the National Democratic Party and the Participatory Party, which advocate expansionary fiscal policies, are expected to increase their votes. Therefore, it was anticipated that fiscal expansionary policies would strengthen after the election, leading to concerns about yen weakness, dollar strength, and rising ultra-long-term interest rates.
The parties gaining momentum recently are making unrealistic claims, such as presenting policies that are practically impossible as if they were feasible.

On Friday, interest rates in the Japanese government bond market plummeted. It may have overestimated the ruling party’s defeat. This point deserves attention.