The US dollar traded near its lowest level against the Japanese yen in more than seven weeks on Wednesday as a cautionary mood took over the market. Traders are anticipating a vote in the United Kingdom, a monetary policy decision from the European Central Bank, and a testimony connected to Donald Trumpâs ties with Russia.
Polling stations across the United Kingdom will begin receiving voters tomorrowâs morning for a snap general election that was called for by Prime Minister Theresa May last April. Mayâs call was widely supported by Members of Parliament, who voted 522 to 13 in favor of the election with the aim of uniting the nationâs political power.
Latest polls showed that the gap between the Labour Party and the Conservative Party narrowed to about 6% with the Conservatives in lead. Regardless of which party wins tomorrow, the departure of the United Kingdom from the European Union is expected to be little affected. However, a win for the Labour Party will improve the chances of a soft Brexit, which may prove better for the economic stability of the region.
Later in the day, the European Central Bank will release a monetary policy decision after concluding its Juneâs meeting. The central bank will follow the release with a press conference at 12:30 GMT, during which it might reveal a reduction for its inflation outlook, according to latest reports. A reduced inflation outlook could lead to an extension of the central bankâs monetary easing program.
Meanwhile, in the United States, former Federal Bureau of Investigation Director James Comey will testify tomorrow before a Senate committee that is investigating his meetings with Donald Trump. A memo written by Comey reportedly said that the US president had asked him to end a probe into the ties between a member of Trumpâs campaign team and Russia.
The testimony may stoke controversies surrounding the Trump administration, which would negatively affect the presidentâs ability to execute his economic plans. Trump promised during his presidential election campaign to reduce corporate taxes and increase infrastructure spending.
The Japanese yen, which is viewed as a safe asset in times of uncertainty or turmoil, climbed against the US dollar as traders reduced their exposure ahead of tomorrowâs events.
USD/JPY declined to 109.45 at 13:55 GMT on Wednesday after touching 109.12 at 08:50 GMT, the pairâs lowest level since April 21. USD/JPY began trading today at 109.49.
The Dollar Index, which measures the performance of the greenback against other major currencies, edged higher to 96.66 at 13:51 GMT today from 96.63 yesterday.
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