Takaichi's Approval Rating Slumps Amid Rising Living Costs and Yen Pressure

Japan's Prime Minister Sanae Takaichi is facing increasing pressure due to her expansionary economic policies, which have driven up bond yields and pushed the Japanese Yen to four-decade lows. According to a Yomiuri newspaper report on Sunday, Takaichi's approval rating fell in July to its lowest point since she took office last year, largely due to rising living costs.

The slump in Takaichi's approval rating has intensified pressure on her government, with market participants remaining cautious about potential supply disruptions. The US-Iran conflict pause has eased risk aversion, causing the USD/JPY pair to lose ground as the US Dollar falls. However, Iran-backed Houthis in Yemen claimed responsibility for attacks on Saudi Arabian facilities along the Red Sea, keeping concerns about supply disruptions alive.

The Federal Reserve is widely expected to hold interest rates steady on Wednesday before resuming rate hikes in September. A minority of market participants still anticipate a surprise move at this week's meeting. The Bank of Japan is also expected to hold rates on Friday.