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The USD/JPY pair extends the rally to around 153.05 during the early Asian session on Friday, bolstered by a firmer US dollar (USD). The Greenback edges higher to its highest since February against the Japanese Yen (JPY) amid the lack of progress around the US government shutdown.

The JPY remains under pressure as the newly elected leader of Japan's ruling party, Sanae Takaichi, failed to instill confidence in the market about the direction of the currency. The surprise election of 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 undermines the JPY.

Japan’s Takaichi pushed back against the view that she favors further weakness in the JPY. “I have no intention of triggering an excessively weak yen. But, just as a rule of thumb, I would say there are both merits and demerits to a weak yen,” said Takaichi

The US Senate remained deadlocked on legislation to end the government shutdown on Friday. Traders will closely monitor how long the US federal government shutdown will last. Concerns over the impact of a prolonged US government shutdown on the US economy could exert some selling pressure on the USD. 

The preliminary reading of the U-Mich Consumer Sentiment report will take center stage later on Friday, along with the speeches by the Federal Reserve’s (Fed) Goolsbee and Musalem. Any dovish comments from Fed officials could drag the USD lower against the JPY in the near term. 

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