Yen slumps after Japan's election, dollar set for biggest monthly rise in 2-1/2 years
The yen sank to a 3-month low on Monday as investors figured the loss of a parliamentary majority for Japan's ruling coalition in weekend elections would slow interest rate rises, while the U.S. dollar headed for its biggest monthly gain since April 2022.
In the Asia session, the yen weakened as far as 153.88 per dollar and 166.06 per euro , on both counts the softest since late July. The yen was last down about 0.7% on the dollar at 153.35, with a 6.4% drop through October, the largest of any G10 currency.
Elsewhere, the dollar was pushing higher and on course for its largest monthly rise in two and a half years on signs of strength in the U.S. economy. Bets on Donald Trump winning the presidency and strong economic data lifted U.S. yields in anticipation of policies that could delay interest rate cuts.
The U.S. dollar index has climbed 3.6% to 104.46 during October, its sharpest monthly rise since April 2022. It was last down 0.1% at 104.28.
At $1.0816, the euro rose 0.2% on Monday but was down more than 3% on the month.
Investors are now focusing on the October government payrolls report this week, which is likely to be affected by a strike at Boeing and two hurricanes that hit the U.S. Southeast.
Ten-year Treasury yields are up 40 basis points for October against a rise of 16 bps for 10-year bunds and 23 bps for gilts.
A further drag from disappointment in China's stimulus plans had the Australian and New Zealand dollars under pressure and slipping to 2-1/2 month lows on Monday.
Selling carried the kiwi to $0.5958 and a 6% loss for October so far, while the Aussie inched lower to $0.6579 and is down 4.6% in October.
Source: Reuters
