The Japanese yen rose in Asian trading on Friday against a basket of major and minor currencies, attempting to recover from an eight-month low versus the US dollar recorded earlier in the session, as traders engaged in moderate buying from depressed levels.

Still, the yen remains on track for its biggest weekly loss in a year, pressured by expectations that Sanae Takaichi — poised to become Japan’s first female prime minister — will favor expansionary fiscal and monetary policies.

Price Overview

• USD/JPY rate today: The dollar slipped 0.25% to ¥152.64 from an opening level of ¥153.04, after touching a high of ¥153.27 — its strongest since February.

• The yen closed Thursday down 0.25% versus the dollar, marking a sixth straight daily loss amid ongoing political-driven selling pressure.

Weekly Performance

So far this week, the yen has fallen about 3.5% against the US dollar, heading for its third weekly loss in a month and its steepest since September 2024.

Political Pressure from Takaichi

The yen came under heavy pressure at the start of the week following Sanae Takaichi’s election as leader of Japan’s ruling Liberal Democratic Party, paving the way for her to become the country’s first female prime minister.

Her victory reinforced expectations that the incoming government will boost public spending and maintain loose monetary policy — factors weighing on the currency.

In her post-election press conference, Takaichi said the government and the Bank of Japan should work closely to achieve demand-driven inflation supported by rising wages and corporate profits.

Analyst Commentary

• Carol Kong, currency strategist at Commonwealth Bank of Australia in Sydney, said the USD/JPY’s rise has been “almost uninterrupted,” adding that only profit-taking could pause the uptrend.

• Kong added that confirmation of Takaichi’s appointment and the upcoming Bank of Japan meeting in October could be the next catalysts for further yen weakness, especially if she reaffirms her dovish stance and the BOJ signals no near-term rate hikes.

• Karl Schamotta, chief market strategist at Corpay in Toronto, noted that traders are increasingly skeptical about Takaichi’s ability to push through fiscal stimulus while resisting BOJ tightening plans.

• Schamotta added: “This reflects Japan’s underlying inflation dynamics — households are demanding change as inflation remains high.”

Japanese Interest Rates

• Following Takaichi’s victory, market pricing for a 25-basis-point BOJ rate hike in October fell from 60% to 25%.

• Yen swap markets now assign a 41% chance of a rate increase by December, down from 68% before the party election.

The 160 Yen Threshold

Atsushi Takeuchi, a former Bank of Japan official who participated in Tokyo’s market operations a decade ago, told Reuters that authorities may tolerate moderate yen weakness but could intervene if the currency plunges sharply toward ¥160 per dollar.

“Officials won’t mind if the yen’s decline remains gradual,” Takeuchi said. “Alarm bells will ring if traders start talking about a sharp fall toward 160 or 170 yen per dollar.”

He added, “If the yen drops that far, authorities can — and should — intervene. While intervention can’t change the broader market trend, it can slow or halt excessive declines in the yen.”

Bitcoin climbed above $122,000 in the past 24 hours, supported by hints from the US Federal Reserve suggesting that further interest rate cuts may be on the way.

Strong, sustained demand for spot Bitcoin exchange-traded funds (Spot Bitcoin ETFs) also helped lift the price of the world’s largest cryptocurrency by market capitalization.

Bitcoin (BTC-USD) rose in early Thursday trading, briefly surpassing $123,000 before paring gains to stabilize above $122,000, up around 1% for the day.

Despite these gains, and after reaching an all-time high above $126,000 earlier in the week, British investment platform Hargreaves Lansdown took a firm stance against the crypto sector.

In a statement to the Financial Times on Thursday, the company said: “We do not believe cryptocurrencies possess the characteristics that make them suitable for inclusion in investment portfolios, whether for growth or income purposes, and they should not be relied upon to help clients achieve their financial goals.”

The company added that “Bitcoin is not an investment asset class.”

This statement coincided with the UK Financial Conduct Authority’s (FCA) decision to lift a four-year ban on retail investors’ access to regulated crypto investment products.

However, Hargreaves Lansdown clarified it would conduct further risk assessments before deciding whether to offer access to exchange-traded notes (ETNs) linked to cryptocurrencies on its platform.

Fed Minutes Indicate Policy Shift

Hargreaves Lansdown’s cautious view of the crypto market comes amid a strong rally in digital assets, fueled by dovish signals from the US Federal Reserve and large inflows into Bitcoin and Ether spot funds.

On Wednesday, minutes from the Fed’s September meeting showed that about half of policymakers expect two additional rate cuts before year-end — signaling a more accommodative stance by the central bank.

Markets responded with broad gains across equities, cryptocurrencies, and commodities.

That same day, spot Bitcoin ETFs recorded net inflows of $441 million — the eighth consecutive day of positive flows — while spot Ether funds added another $69 million, underscoring renewed investor appetite for digital assets.

Meanwhile, gold surged above $4,050 per ounce for the first time, rising 11.7% in October and about 55% year-to-date, as growing fears over fiat currency weakness pushed investors toward tangible assets.

Timothy Messer, head of research at BRN, said: “The markets absorbed the week’s volatility and emerged stronger. The Fed minutes were the catalyst bulls needed — confirmation that monetary policy is tilting toward faster easing, not tightening. As a result, both gold and Bitcoin jumped, reaffirming the broader trend toward hard assets leading this cycle.”

He added that eight consecutive days of ETF inflows signal strong and sustained structural demand, while major corporations are expanding their participation by adding Bitcoin to their treasuries as a strategic reserve asset.

Messer also noted that easing geopolitical tensions — aided by the ‘Middle East Peace Framework’ brokered by President Donald Trump — reduced short-term volatility and gave traders a clearer outlook for the final quarter of the year.

Institutional Players Drive the Current Rally

Ryan Lee, chief analyst at Bitget, told Yahoo Finance UK that Bitcoin’s recent surge to record highs above $126,000 has been driven by increasing ETF inflows and growing institutional involvement.

Bitcoin hit a new all-time high of $126,198 on Monday, October 6, as investor enthusiasm for spot Bitcoin ETFs intensified.

“Market data shows that since the start of October, we’ve seen massive inflows into Bitcoin ETFs, peaking at over $1.2 billion on October 6 — a liquidity surge that translated directly into the record high of $126,198 that same day,” Lee explained.

He added: “With the ongoing US government shutdown, investors across segments have turned to Bitcoin and other assets as hedges against macro uncertainty. At the same time, exchanges are showing declining Bitcoin supply, reflecting a liquidity squeeze that could pave the way for further price appreciation.”

Lee noted that the current bull cycle differs from previous ones: “In addition to continuous accumulation by spot Bitcoin ETFs, corporations are now directly adding Bitcoin to their balance sheets as a primary store of value and inflation hedge.”

Gold prices declined in the European market on Thursday for the first time in five sessions, pulling back from record highs due to profit-taking activity and pressure from a stronger US dollar in the foreign exchange market.

The Federal Reserve minutes reinforced expectations of two interest rate cuts before the end of this year, as markets await further evidence regarding the continuation of monetary policy easing in the United States.

Price Overview

• Gold prices today: Gold fell by 1.0% to 4,001.44 dollars, down from the opening level of 4,041.06 dollars, after recording an intraday high of 4,043.80 dollars.

• On Wednesday, gold settled 1.4% higher, marking its fourth consecutive daily gain and a new record high at 4,059.34 dollars per ounce, supported by strong safe-haven demand.

US Dollar

The US Dollar Index rose on Thursday by 0.25%, extending its gains for a fifth consecutive session to reach a two-month high at 99.10 points, reflecting continued strength against major and minor currencies.

As is well known, the appreciation of the US dollar makes gold bars priced in dollars less attractive to holders of other currencies.

This rise came as investors continued to buy the dollar as the best alternative investment in the foreign exchange market, amid escalating political risks in Europe and Japan, as well as concerns surrounding the ongoing US government shutdown.

US Interest Rates

• The minutes of the September 16–17 meeting released on Wednesday showed that Federal Reserve officials agreed that risks in the US labor market had increased enough to justify a rate cut, though they remained cautious amid persistent inflation and debate over the extent to which borrowing costs are affecting the economy.

• According to the CME FedWatch tool, markets currently price a 95% probability of a 25-basis-point rate cut in the October meeting, and a 5% probability of no change.

• To reassess these probabilities, investors are closely monitoring the resumption of key US economic data releases, as well as ongoing remarks from Federal Reserve officials.

Gold Outlook

Nikos Tzaboras, senior market analyst at Trado, said that gold’s rally faces resistance after the diplomatic breakthrough in Gaza, which reduced safe-haven inflows, while the continued recovery of the US dollar weakens the precious metal’s momentum, leaving it vulnerable to potential pullbacks.

However, he added that the overall uptrend remains intact, and the path toward new record highs is still wide open.

SPDR Fund

Gold holdings in the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, rose by 1.43 metric tons yesterday, bringing the total to 1,014.58 metric tons.

The euro rose in European trading on Thursday against a basket of global currencies, holding above its six-week low versus the US dollar and heading for its first daily gain in four sessions. The rebound came as traders bought from recent lows and optimism grew over a potential resolution to France’s political crisis, with President Emmanuel Macron reportedly close to naming a new prime minister.

Amid renewed inflationary pressures facing European Central Bank (ECB) policymakers, expectations for further interest-rate cuts this year have weakened. Investors are now awaiting additional economic data and comments from ECB officials to reassess those odds.

Price Overview

• Euro exchange rate today: The euro rose around 0.2% to $1.1648, from an opening level of $1.1628, after touching a session low of $1.1619.

• On Wednesday, the euro fell 0.25% against the dollar—its third loss in four days—hitting a six-week low of $1.1598 amid continued political uncertainty in France.

US Dollar

The US Dollar Index slipped 0.15% on Thursday, retreating from a two-month high of 99.08 points, and heading for its first loss in four sessions, reflecting a pause in the dollar’s recent rally against major and minor peers.

Beyond profit-taking, the latest Federal Reserve meeting minutes reinforced expectations for at least two additional rate cuts by the end of this year.

A New French Prime Minister

Outgoing Prime Minister Sébastien Lecornu said President Macron could nominate a new prime minister within 48 hours — a move seen as a swift attempt to contain the political turmoil following the collapse of France’s short-lived government just hours after it was formed.

These developments come at a delicate time for European markets, as political instability in Paris has raised investor concerns about the outlook for Macron’s economic reforms. The Élysée is now seeking to form a government capable of securing parliamentary confidence and easing domestic tensions.

European Interest Rates

• Data last week showed eurozone inflation rising in September in line with forecasts, underscoring persistent price pressures on ECB policymakers.

• Following that data, money-market pricing for a 25-basis-point ECB rate cut in October has stabilized below 10%.

• Traders have scaled back bets on further monetary easing, suggesting that the ECB’s current rate-cutting cycle may be over for this year.

• According to sources, ECB officials believe no additional rate cuts are needed to achieve the 2% inflation target, despite new projections pointing to lower rates over the next two years.

• The same sources indicated that unless the eurozone faces another major economic shock, borrowing costs are expected to remain at current levels for some time.