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Forex Today: Japanese Yen rises after Takaichi wins landslide election victory

Here is what you need to know on Monday, February 9:

The Japanese Yen (JPY) gathers strength against its major rivals to start the week as markets react to Sanae Takaichi's historic election victory. The European economic calendar will feature Sentix Investor Confidence data for February. In the second half of the day, policymakers from the European Central Bank (ECB), the Federal Reserve (Fed) and the Bank of England (BoE) will be delivering speeches.

Japanese Yen Price This week

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the US Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.38%-0.09%-0.70%-0.23%-0.40%-0.13%-0.59%
EUR0.38%0.30%-0.39%0.15%-0.02%0.25%-0.20%
GBP0.09%-0.30%-0.36%-0.15%-0.32%-0.05%-0.50%
JPY0.70%0.39%0.36%0.53%0.35%0.63%0.05%
CAD0.23%-0.15%0.15%-0.53%-0.07%0.10%-0.35%
AUD0.40%0.02%0.32%-0.35%0.07%0.27%-0.18%
NZD0.13%-0.25%0.05%-0.63%-0.10%-0.27%-0.45%
CHF0.59%0.20%0.50%-0.05%0.35%0.18%0.45%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

Japanese Prime Minister Sanae Takaichi’s party, the Liberal Democratic Party (LDP), has won a landslide in Japan’s general election this weekend, securing a supermajority in the country’s lower house of parliament. Although the JPY came under pressure at the weekly opening with the immediate reaction to the election result, it managed to reverse its course following verbal intervention. Japan Chief Cabinet Secretary Minoru Kihara said on Monday that he is concerned over one-sided foreign exchange (FX) moves. Meanwhile, top currency diplomat Atsushi Mimura stated that he will closely watching foreign exchange moves with a high sense of urgency. At the time of press, USD/JPY was trading near 156.50, losing about 0.5% on the day, and EUR/JPY was down 0.2% at 185.20.

According to Bloomberg, Iran’s President Masoud Pezeshkian described latest nuclear talks with the United States (US) as “a step forward,” and US President Donald Trump noted that they will hold another meeting this week. Crude Oil prices edge lower on Monday and the barrel of West Texas Intermediate was last seen losing more than 1% on the day at $62.60.

The US Dollar (USD) Index stays on the back foot after closing the previous week in positive territory and fluctuates below 97.50. Meanwhile, US stock index futures trade mixed after Wall Street's main indexes rallied on Friday.

EUR/USD benefits from the renwed USD weakness and trades above 1.1850 in the European morning on Monday.

GBP/USD struggles to build on Friday's gains and trades in a narrow range at around 1.3600 to start the European session.

Gold (XAU/USD) gained nearly 4% on Friday and ended the week in the green. XAU/USD continues to edge higher on Monday and trades above $5,000.

Japanese Yen FAQs

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

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