Yen slips toward 158.5 as fiscal worries and risk appetite weigh

The Japanese yen weakened toward 158.5 per dollar on Thursday, staying under pressure as concerns over Japans fiscal outlook combined with an improvement in global risk sentiment. On the domestic side, Prime Minister Sanae Takaichi called a snap election and signaled looser fiscal policy, including a proposal to scrap the 8% sales tax on food, which added to worries about public finances. Externally, risk appetite improved after US President Donald Trump reversed his stance on Greenland, stepping back from threats of heavy tariffs on several European countries and announcing in Davos that a framework for future Greenland-related deal with NATO had been reached. Attention now turns to the Bank of Japan, which is due to announce its policy decision on Friday. The central bank is widely expected to keep policy unchanged after lifting the overnight rate to 0.75% in December, the highest level in three decades. Markets will closely watch Governor Kazuo Uedas post-meeting comments for signals on the timing of the next rate hike, which could shape near-term moves in the yen.

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