USD/JPY extends the rally above 152.50 on fiscal fears in Japan

• USD/JPY gains momentum around 152.60 in Thursday’s early Asian session.

• The US Dollar has benefited from a lack of government economic data as the federal government remains shut. 

• Takaichi's election raises fiscal spending concerns. 

The USD/JPY pair extends its upside to near 152.60, the highest since February, during the early Asian session on Thursday. The US Dollar (USD) edges higher against the Japanese Yen (JPY) despite US government shutdown concerns. The US weekly Initial Jobless Claims will be postponed again later on Thursday. Traders will closely monitor the speeches by Federal Reserve (Fed) Chair Jerome Powell. 

The Senate on Wednesday again rejected dueling Republican and Democratic funding proposals to end the government shutdown, which has entered its ninth day with no hint of progress toward a resolution. However, the lack of US government economic data that might point to a slowing economy helps the Greenback gain against the JPY. 

“Once the focus shifted to developments outside of the U.S. and then there's no kind of negative drag on the dollar from potentially weaker U.S. data, then the dollar is doing well,” said Vassili Serebriakov, an FX and macro strategist at UBS in New York.

Minutes from the Fed's September meeting released on Wednesday showed that policymakers are leaning toward further rate cuts this year. While most officials backed the quarter-point reduction. The tone overall was cautious but pointed to a continued dovish bias. This, in turn, could weigh on the USD in the near term. 

The surprise election of Sanae Takaichi to Japan’s ruling Liberal Democratic Party (LDP) on Saturday raises concerns about an increase in fiscal spending in Japan and prompts traders to reduce bets that the Bank of Japan (BoJ) will hike interest rates this month, which weighs on the JPY.