• The Japanese Yen appreciates as the US Dollar remains tepid ahead of the US labor data release on Friday.
• Japan’s Economy Minister Akazawa stated that the timing of any monetary policy changes is crucial
• Traders await Friday’s US employment data, including Nonfarm Payrolls (NFP) and Average Hourly Earnings, for further direction.

The Japanese Yen (JPY) retraces recent gains following comments from Japan’s ministers on Friday. Newly appointed Economy Minister Ryosei Akazawa stated that Prime Minister Shigeru Ishiba and the Bank of Japan (BoJ) both agree that overcoming deflation is Japan's highest priority.

Economy Minister Akazawa added “No change to the interpretation of the government-Bank of Japan (BoJ) accord targeting 2% inflation.” The timing of monetary policy change is important and must align with Japan's broader goal of exiting deflation.

Japan's Chief Cabinet Secretary Yoshimasa Hayashi announced on Friday that Prime Minister Ishiba has directed the creation of a comprehensive economic package. Hayashi also mentioned that he plans to present a supplementary budget to Parliament following the lower house election.

However, the downside of the USD/JPY pair could be limited as the Japanese Yen may struggle due to the waning likelihood of further rate hikes by the Bank of Japan. Newly elected PM Ishiba stated on Wednesday, "I do not believe that we are in an environment that would require us to raise interest rates further," according to Reuters.