The Japanese yen rose in the Asian market on Friday against a basket of major and minor currencies, as part of a recovery from five-week lows against the US dollar, supported by bargain buying from lower levels and positive economic data showing a strong jump in Japanese wages.

Despite this rise, the Japanese currency is on the verge of incurring a second consecutive weekly loss, due to growing concerns this week over the political situation in Japan, the world’s fourth-largest economy.

Global financial markets later today await the release of the US monthly jobs report, which will provide decisive pricing for the probabilities of the Federal Reserve cutting interest rates in September and October.

Price Outlook

• Yen exchange rate today: The dollar fell against the yen by about 0.3% to (148.08¥), from the opening price of (148.49¥), recording the highest level at (148.52¥).

• The yen ended Thursday’s session down by 0.3% against the dollar, nearing the lowest level in five weeks at 149.14 yen, pressured by political conditions in Japan.

Japanese Wages

Japan’s Ministry of Labor said Friday that total monthly cash earnings and a separate measure of full-time wages rose by 4.1% year-on-year in July, the fastest pace since December 2024, better than expectations of a 3.0% rise. Wages had increased by 3.1% in June.

Rising wages in Japan could pave the way for further price increases and faster inflation in the coming period. Undoubtedly, intensifying inflationary pressures on policymakers at the Bank of Japan increase the chances of additional interest rate hikes before the end of this year.

Japanese Interest Rates

• Following the above data, pricing of the probability of the Bank of Japan raising interest rates by a quarter point at the September meeting rose from 25% to 35%.

• To re-price those probabilities, investors await more data on inflation, unemployment, and wages in Japan, in addition to monitoring comments from some Bank of Japan members.

Weekly Performance

Over the course of this week, which officially ends with today’s settlement, the yen is down about 0.75% against the US dollar, on the verge of incurring a second consecutive weekly loss.

Political Situation in Japan

The secretary-general of Japan’s ruling party, Hiroshi Moriyama, one of Prime Minister Shigeru Ishiba’s closest allies, announced his intention to resign from his post, in a move that could deepen the party’s crisis and cast a shadow over Ishiba’s political future.

This development comes after growing pressure on the prime minister following the recent electoral defeat, with mounting calls for him to step down, though he has so far held firm and refused to resign.

Observers believe that Moriyama’s departure could weaken Ishiba’s internal standing and increase the likelihood of him coming under more political pressure in the period ahead.

These developments open the door for Sanae Takaichi as one of the leading candidates to succeed Ishiba. She is known for her economic stance favoring the maintenance of low domestic interest rates, which reinforces expectations of a more accommodative monetary policy in Japan should she assume the premiership.

US Jobs

Later today, the August US jobs report will be released, including new nonfarm payrolls, the unemployment rate, and average hourly earnings.

This data will provide decisive pricing for the probabilities of the Federal Reserve cutting interest rates by 25 basis points at the September meeting and another 25 basis points at the October meeting.

Expectations for Yen Performance

We at Economies.com expect the Japanese yen to continue trading in positive territory against the US dollar, especially if US jobs data comes in cooler than market expectations.

Ethereum price declined during Thursday’s trading session under pressure on most major cryptocurrencies, as markets assessed US economic data and awaited the monthly employment report in the world’s largest economy.

According to ADP data released Thursday, the private sector added 54,000 jobs in August, while expectations pointed to 75,000, after July’s addition of 104,000 jobs.

The US Department of Labor also reported an increase of 8,000 in initial jobless claims to 237,000 in the week ending August 30, the highest level since late June, compared with expectations of 230,000.

A report from the Institute for Supply Management (ISM) showed that the services PMI rose to 52 in August from 50.1 in July.

According to CME FedWatch, there is now a 97.4% probability of a Federal Reserve rate cut in the September meeting following the ADP report, up from 96.6% the previous day.

This comes ahead of the release of the US nonfarm payrolls report for August on Friday, data that could determine the Fed’s decision in this month’s meeting.

Ethereum

In trading, Ethereum fell by 3.8% to $4,304.5 on CoinMarketCap at 21:32 GMT.

Gold prices fell during Thursday’s trading session as the US dollar strengthened against most major currencies, pulling the precious metal slightly away from its record levels following the release of economic data.

According to ADP data published Thursday, the US private sector added 54,000 jobs in August, below expectations of 75,000 and down from July’s 104,000. Meanwhile, the US Department of Labor reported that initial jobless claims rose by 8,000 to 237,000 in the week ending August 30, the highest since late June, compared with forecasts of 230,000.

In a separate release, the Institute for Supply Management (ISM) said its services PMI rose to 52 in August from 50.1 in July, signaling renewed expansion.

According to CME FedWatch, the probability of a Federal Reserve rate cut in September climbed to 97.4% following the ADP report, up from 96.6% the previous day.

Meanwhile, the US dollar index rose 0.2% to 98.3 at 20:12 GMT, after reaching a high of 98.4 and a low of 98.08.

In commodities trading, spot gold fell 0.8% to $3,605 per ounce at 20:13 GMT.

Silver prices surged above $40 an ounce on Monday for the first time in more than a decade, fueled by mounting bets that the US Federal Reserve will cut interest rates this month.

Spot silver rose 2.04% to $40.55, its highest since September 2011, before easing back to $41.34 on Thursday, down 1.7%.

Analysts attributed the latest rally to reduced liquidity during the US bank holiday, which bolstered safe-haven metals like gold and silver. Expectations of Fed rate cuts and a tight supply backdrop further supported the move.

Ole Hansen, head of commodity strategy at Saxo Bank, said: “Silver has broken above $40 an ounce to its highest in 14 years, extending a rally that has already delivered 37.5% gains this year. By comparison, gold is up 31% in the same period, but silver’s outperformance reflects its dual role as both an investment asset and an industrial metal.”

Hansen noted the surge is not the start of a new trend but part of an ongoing rally since 2022, underpinned by the same macroeconomic forces lifting gold. He pointed to heightened expectations of rate cuts, Trump’s tariff policies that risk dampening growth while keeping inflation elevated, concerns about Fed independence, and rising geopolitical risks.

He added that silver’s relative cheapness compared to gold gave it extra momentum, with the gold-to-silver ratio near 85, above the five-year average of 82. While gold needs new record highs to extend its rally, silver still trades below its 2011 peak near $50, leaving scope for further investor demand.

Industrial Demand Stays Strong

Hansen emphasized silver’s unique industrial underpinning: “Silver shares the same macro drivers as gold—dollar, real yields, rate sensitivity—but also benefits from robust industrial demand, especially in solar and electrification.”

Forecasts suggest another notable supply deficit this year, albeit smaller than 2024. Structural shortages have repeatedly limited downside corrections even during periods of dollar strength or reduced easing expectations.

After breaking through resistance near $35 in June, silver has tended to find buyers on dips, with volatility higher than gold due to its hybrid role.

The rally coincided with gold hitting a four-month high at $3,483.59 on Monday, up 1.03%. Unlike gold, however, silver’s demand is split almost evenly between investment and industry, giving it two growth engines. Photovoltaics alone account for about 20% of global demand. Jewelry demand could ease if prices remain elevated, but ETF inflows remain robust, with holdings at their highest in three years.

Rate Cut Bets and Dollar Weakness Drive Precious Metals

Comments from San Francisco Fed President Mary Daly last Friday encouraged traders to overlook a stronger-than-expected core PCE reading, reinforcing bets on a 25-basis-point cut this month.

The dollar came under further pressure after a US appeals court ruled most of Trump’s tariffs illegal, sending gold to a four-month high and silver to a 14-year peak.

Fresh PCE inflation data showed a 0.2% monthly rise and 2.6% annual increase, broadly in line with expectations, keeping precious metals supported.

Shifts in Global Silver Market Dynamics

Silver is increasingly seen as a hedge asset, drawing interest from institutional investors such as pension funds and mutual funds. This trend could underpin a long-term rally similar to gold’s trajectory.

The US remains the largest silver investment market, led by pension demand. India follows closely and may soon overtake, given last year’s record imports. Germany and Australia also remain key markets, with coins and bullion as the most popular forms.

Silver’s Road Toward Record Highs

The clear breakout above $40 has sparked speculation about revisiting the historic $50/oz level. While difficult to achieve this year, analysts say it cannot be ruled out.

Two key drivers will be Fed monetary policy and US trade tariffs. If the Fed eases policy while the government tightens tariffs, the twin forces could push silver closer to record highs. Technically, the next target is the 2011 peak at $44, with $50 in view longer term.

Short-term corrections remain possible, offering buying opportunities near $40 support, which also aligns with the uptrend line. A deeper pullback could test $37 support, a level that has held repeatedly in the past.