Yen Plays Out ‘Buy the Rumour, Sell the Fact’

Improved global risk appetite undermined the US dollar. The S&P 500 recorded its best daily rally since May amid easing fears about the negative impact of artificial intelligence on technology and other companies’ shares. Bitcoin managed to bottom out and followed the rally in US stock indices. Gold returned above $5,000 per ounce, while demand for the greenback as a safe-haven asset declined.

Traders are taking profits on long positions in the USD index after the best week for the US dollar since early January, as important reports approach. Releases of data on employment, inflation and retail sales will clarify the situation with the US economy and allow conclusions to be drawn about the Fed’s monetary policy. The futures market sees a 70% probability of a rate cut in June and a 33% chance for April. Growing confidence in a rate cut, if not undermined by US statistics, will inspire the EURUSD bulls.

USDJPY quotes rose in anticipation of the vote outcome in the lower house. However, when the market opened, investors preferred to take profits, which strengthened the yen by almost 1%.

The Liberal Democratic Party won a record 316 seats in the lower house of Parliament. Together with its coalition partner, the Japan Innovation Party, it holds 354 of the 465 seats, allowing the LDP to pursue its policies without the approval of other parties. Takaichi contributed to the Nikkei 225’s rise to a historic high.