The Japanese yen rushed on Monday to two-week highs in Asian trade against the dollar, moving away from three-month lows, amid mounting doubts about a Trump win in the US presidential elections held this week.

Otherwise, the odds of another Japanese interest rate hike for the third time this year remain weak, but on the other hand, the Federal Reserve is preparing for a likely rate cut this week. 

The Price 

The USD/JPY pair fell 0.9% to 151.59 yen per dollar, the lowest since October 25, with a session-high at 152.55. 

The yen lost 0.6% on Friday against the dollar, resuming losses and moving away from three-month lows at 153.88. 

The yen lost 0.45% against the dollar last week, the fifth weekly loss in a row amid concerns about the Japan-US treasury yield gap. 

US Elections 

Latest opinion polls on the US presidential election showed a slight lead by Kamala Harris in some swing states, which caused instability in the markets and hurt the dollar’s standing. 

Harris’ chances of winning in the betting market surged to 54% from just 42% a week ago following recent polls. 

A Trump win was conceived to be beneficial to the dollar, however it was already priced in. 

A Harris win and a divided Congress would tank Trump-related trades and might cause heavy losses in the dollar, gold, bitcoin, and on Wall Street. 

Japanese Rates 

As expected, the Bank of Japan voted to hold interest rates unchanged at 0.25%, the highest since 2008, for the second straight meeting.

All nine members of the BOJ voted in favor of holding rates as they wait for more data to study the need for further policy normalization.

The Bank of Japan expects inflation to move towards the 2% target in upcoming years, and asserted its commitment to raising borrowing costs if the economy continues to rebound.

It said it’ll keep a close eye on global financial and economic developments, especially in the US, and how they would impact the Japanese economy moving forward. 

The BOJ believes that prices are facing upward pressures in the 2025 financial year, with a possibility of raising rates if economic forecasts were realized. 

US Rates

According to the Fedwatch tool, the odds of a 0.25% US interest rate cut in November stood at 99%.

The Federal Reserve is now convening later this week to discuss policies and decide on interest rates. 

US stock indices surged on Friday and opened November on a stellar note, following the release of highly disappointing US payrolls data. 

The US economy added just 12 thousand new jobs in October, the slowest such pace since December 2020, and below estimates of 100 thousand.

Next week, all eyes will be focused on the US presidential election in addition to the Federal Reserve’s policy meeting, expected to end with a 0.25% interest rate cut. 

On trading, Dow Jones rallied 1.1% as of 15:59 GMT to 42209 points, while S&P 500 rose 0.9% to 5756 points, as NASDAQ added 1.2% to 18,3320 points. 

Oil prices rose in American trade on Friday on track for the third straight session, as the dollar sustained losses, and after a surprise drop in US crude stocks.

Prices are also boosted by recent media reports that the OPEC+ alliance will delay a scheduled production hike in December, in order to provide support and stability to prices.

Prices 

US crude rose 1.4% today to $71.40 a barrel, with a session-low at $70.35.

Brent added 1.2% to $75.38 a barrel, with a session-low at $74.25.

On Thursday, US crude rose 2.1%, while Brent added 1.9%, moving away from recent four-week lows.

The Dollar

The dollar index fell 0.2% on Friday on track for the fifth profit in a row, while plumbing a week trough at 103.68 against a basket of major rivals.

The decline comes after grim US data that showed the economy in October added the fewest jobs in nearly four years. 

The data bolstered the case for 0.25% Federal Reserve interest rate cuts in both November and December. 

A weaker dollar underpins dollar-denominated oil futures as they become cheaper to holders of other currencies.

US Stocks 

The Energy Information Administration reported a drop of 0.5 million barrels in US crude stocks last week to 425.5 million barrels, while analysts expected a rise of 0.8 million barrels. 

Gasoline stocks fell by 2.7 million barrels to 210.9 million barrels, while distillate stocks fell by a million barrels to 112.9 million barrels. 

US Production

The EIA reported no change in US crude output last week at 13.5 million bpd, already a record high. 

OPEC+ 

According to Reuters, the OPEC+ group will likely delay its decision to raise output gradually in December, in order to stabilize the market. 

OPEC+ was scheduled to raise output by 180 thousand bpd in December, with the delay decision expected to be issued next week.

Official data showed the US economy added just 12 thousand jobs in October, the slowest pace since December 2020, and far below estimates of the addition of 106 thousand new jobs, while the previous reading was revised downward from 254 thousand to 223 thousand.