Japanese Yen Weakens as Surprise Deficit Pushes USD/JPY Towards 159

The Japanese Yen (JPY) has weakened against the US Dollar (USD), pushing USD/JPY towards 159. The currency's decline comes as Japan recorded an unexpected current account deficit of ¥92.3B in June, a reversal from the expected surplus of ¥1,512B.

Higher oil prices and significant dividend payments to foreign investors contributed to the deficit, which was the first in 17 months. This development has added selling pressure on the Japanese Yen at the start of the week.

Japan's fiscal situation is also a headwind for the currency, with public debt exceeding 200% of Gross Domestic Product (GDP) and concerns over long-term debt sustainability fueled by Prime Minister Sanae Takaichi's expansionary policies and proposed tax cuts.