The Japanese yen weakened to around 156 per dollar on holiday-thin trading Tuesday, reversing gains from the previous session, as investors weighed the country’s expansive fiscal policy. The cabinet recently approved Prime Minister Sanae Takaichi’s record-setting 122.3 trillion yen budget, aiming to balance aggressive fiscal spending with debt management by curbing new bond issuance. However, Japan's fiscal position remains a source of concern. With public debt already exceeding twice the size of the country’s economy, the government faces limited flexibility to implement bold stimulus measures. Nevertheless, the losses in the yen were partially offset by signals from authorities suggesting a potential intervention, following Finance Minister Katayama’s emphasis on Japan’s freedom to act against excessive currency moves. On the monetary policy front, markets are watching July for the next rate hike, though an earlier move is possible if the yen weakens further.