Economic Data and Market Sentiment - Japanese exports rose for the fifth consecutive month in January, indicating a positive trend in trade [6][9] - Confidence among Japanese manufacturers improved in February for the first time in three months, as per the Reuters Tankan poll [6][9] - The International Monetary Fund urged Japan to continue raising interest rates and avoid further loosening of fiscal policy [7][9] Geopolitical Developments - Progress was reported in nuclear talks between Iran and the U.S., with an understanding on main "guiding principles" reached, although a deal is not imminent [5][8] - Peace negotiations between Ukraine and Russia are ongoing, with U.S.-mediated talks taking place in Geneva [6][8] U.S. Economic Indicators - The Federal Reserve's Open Market Committee is set to release minutes from its January meeting, which may provide insights into future monetary policy [8] - The U.S. Commerce Department will issue its first estimate for GDP for the fourth quarter on Friday, which is a key economic indicator [8] Currency Market Movements - The dollar index remained stable at 97.11 after a two-day advance, reflecting mixed market sentiment [2][8] - The yen strengthened by 0.1% to 153.12 per dollar, while the euro held steady at $1.1852 [2][5] - The Australian dollar and kiwi remained steady at $0.7083 and $0.6047 respectively, with New Zealand's central bank expected to hold rates [8][9] U.S.-Japan Investment Initiatives - The Trump administration announced three projects valued at $36 billion to be financed by Japan, part of a larger $550 billion investment agreement aimed at reducing U.S. tariffs [7][9]

Economic Overview - The yen trimmed losses from the previous day amid thin trading conditions due to holidays in Asia and the U.S. [1] - Key economic events this week include the release of the Federal Reserve's meeting minutes and advance figures on U.S. GDP [1][10]. U.S. Economic Sentiment - Kristina Clifton, a senior currency strategist, expressed a positive outlook on the U.S. economy, anticipating a high chance of a June interest rate cut, with a follow-up cut expected in July [2]. - The dollar index remained stable at 97.12 after a 0.2% gain in the previous session, while the euro fell by 0.06% to $1.1843 [5][10]. Currency Movements - The yen strengthened by 0.15% to 153.28 per dollar, while the British pound weakened by 0.07% to $1.3616 [6][10]. - The Australian dollar decreased by 0.07% to $0.7064, and New Zealand's kiwi fell by 0.08% to $0.6026 ahead of the Reserve Bank of New Zealand's policy meeting [8][11]. Inflation and Monetary Policy - U.S. consumer prices rose less than expected in January, providing the Federal Reserve with more flexibility for policy easing this year [6][10]. - Money market traders are pricing in 62 basis points of easing for the remainder of the year, indicating two quarter-point cuts and a 50% chance of a third cut [6][11]. - The next interest rate cut is likely in June, with an 80% chance of a 25-basis-point reduction [11]. Global Economic Indicators - Japan's economy showed minimal growth, with an annualized expansion of only 0.2% last quarter, which has implications for potential government stimulus [7][11]. - Minutes from the Reserve Bank of Australia's board meeting indicated concerns over inflation and employment risks shifting materially [9][11]. Cryptocurrency Market - Bitcoin experienced a slight increase of 0.05% to $68,881.72, while ether remained stable at $1,999.11 [9].

By Leika Kihara TOKYO, Feb 16 (Reuters) - Bank of Japan Governor Kazuo Ueda and Prime Minister Sanae Takaichi will hold their first bilateral meeting on Monday since the ruling party's landslide election victory, ‌which could serve as a venue to discuss the central bank's rate-hike plans. The meeting at 5 p.m. (0800 ‌GMT) comes amid simmering market speculation that the rising cost of living, driven in part by the weak yen, could prod the central ​bank to raise interest rates as soon as March or April. ...

A resurgent yen has been the main focus for the foreign exchange market this week, particularly as its rise confounded initial expectations that a selloff in the currency could gather pace if Takaichi secured ‌a strong mandate.It ⁠was last ⁠steady at 152.86 per dollar, but was set to gain nearly 3% for the week, which would mark its largest advance since November 2024.Against the "The election outcome might be seen as marking an end to the political instability that has persisted since July last year, sugg ...

Group 1: Japan's Economic Context - The yen has strengthened since the election, currently trading at 153, indicating a shift in market sentiment [1] - There is a narrative suggesting a turning point for Japan's economy, with a pro-growth outlook and certainty in policy implementation, leading to a belief that the yen is undervalued [2] - Despite the positive sentiment, fundamental bearish reasons for the yen remain, including slow economic growth and a large debt burden with negative real yields [4] Group 2: Dollar Dynamics - The dollar's reaction to strong payroll numbers was less pronounced than expected, indicating a complex relationship between economic data and currency movements [6] - The market is structurally overexposed to the dollar, which is expected to trend downwards over the coming years, with opportunities to offload during spikes [7] - Weak economic data could justify rate cuts, further weakening the dollar, while strong data may not provide relief due to poor monetary policy [8] Group 3: Market Sentiment and Equity Outlook - There is a sense of anxiety in the market, particularly regarding potential shocks in equity due to ongoing portfolio damage and wealth concerns [10] - The impact of AI on job recovery is viewed as slower than some predictions, suggesting a longer timeline for significant changes in the job market [11]

Group 1: Treasury Exposure Concerns - China has issued a warning to banks regarding their concentrated exposure to U.S. treasuries, advising them to reduce excessive holdings, particularly not affecting state banks [1][2] - The global ownership of U.S. treasuries is significant, and concerns are rising about the U.S. government's high debt levels and international policies, leading to potential reductions in treasury exposure by foreign investors [3][4] Group 2: Japanese Market Dynamics - The Japanese stock market is experiencing strong performance, with the Nikkei index up by 3.9%, and the yen showing volatility [4] - There is an expectation that Japanese Government Bond (JGB) yields will continue to rise, which could positively impact the Japanese economy and sustain the bullish trend in Japanese stocks [7] Group 3: U.S. Economic Outlook - There is a bullish sentiment regarding the U.S. economy, despite concerns about stagflation signals from upcoming inflation and jobs data [8][10] - The current jobs data for January is negative, and inflation is not expected to soften, indicating potential challenges for risk assets in the near term [9][10]

In this articleJP3Y-JPJP3M-JPJP20Y-JPJP2Y-JPJP15Y-JPJP10Y-JP.N225A screen displays Nikkei 225 Stock Average inside the Kabuto One building in Tokyo, Japan, on Monday, Feb. 9, 2026. Japanese stocks surged to fresh record highs, while bonds dropped, after Prime Minister Sanae Takaichi's Liberal Democratic Party secured a landslide victory. Photographer: Kiyoshi Ota/Bloomberg via Getty ImagesBloomberg | Bloomberg | Getty ImagesA yen nearing 160 to the dollar, record Japanese equities and higher Japanese govern ...

The yen initially declined to a record trough against the Swiss franc, but rapidly switched direction after a warning about potential Takaichi's Liberal Democratic Party won a landslide 316 of the 465 seats in parliament's lower house in Sunday's snap election, giving her a solid mandate to push through big spending and promised tax relief.But she has repeatedly ‌stressed that her stimulus ‌plans will not blow out the nation's finances, a major concern for markets given Japan already has the developed worl ...

Core Viewpoint - The yen has experienced a modest decline following the Liberal Democratic Party's (LDP) significant electoral victory, which may lead to increased fiscal stimulus under Prime Minister Sanae Takaichi [1][2]. Currency Movement - The yen dropped 0.3% to 157.62 per dollar, marking its weakest level in over two weeks [2]. - The LDP secured a two-thirds super majority in the 465-seat lower house, the highest proportion of representatives for any party in post-war Japan [2]. Fiscal Policy Implications - Concerns regarding Japan's fiscal spending have intensified, particularly after Takaichi's announcement of a temporary sales tax cut on food, raising fears about the country's debt levels [3]. - A decisive electoral victory is expected to bolster expectations for proactive fiscal policy, which may encourage short-term selling of the yen [4]. Market Reactions - Further declines in the yen could approach levels where Japanese authorities previously intervened, with traders monitoring the 159.45 per dollar mark reached in mid-January [5]. - Japanese officials are more focused on currency volatility and the pace of movements rather than specific exchange rate levels [5]. Monetary Policy Expectations - Persistent weakness in the yen is influencing expectations for the Bank of Japan's policy, with increasing speculation about a potential rate hike by April [6]. - The yen's recent decline has been exacerbated by comments from Takaichi, suggesting that a weaker currency could benefit export industries [7]. Intervention Speculations - Analysts anticipate rising verbal interventions as the USD/JPY approaches 159, with actual intervention likely to occur closer to 162 [8].

Economic Outlook - The US economic outlook is improving as uncertainty fades, but risks remain, particularly with hiring concentrated in a few sectors and inflation above the Fed's goal [2] - Markets are discounting a 9% chance for a -25 basis point rate cut at the next policy meeting on March 17-18 [1] Dollar Performance - The dollar fell to a 4-year low following President Trump's comments on its weakness, compounded by foreign capital outflows due to a growing budget deficit and political polarization [1] - The dollar index (DXY) decreased by -0.21%, influenced by a stronger Chinese yuan and higher T-note yields that weakened the dollar's interest rate differentials [6] - The dollar's losses were somewhat contained due to increased liquidity demand from a stock sell-off and supportive comments from Richmond Fed President Tom Barkin regarding the economic outlook [5] Government Shutdown Impact - The partial US government shutdown, now in its fourth day, negatively impacts the dollar, although it is expected to be brief as a spending bill vote is anticipated [3][13] - President Trump announced a tentative deal with Senate Democrats to fund the Homeland Security Department for two weeks, allowing more time for immigration talks [3] Precious Metals Market - Precious metals are experiencing increased demand as a safe-haven asset amid geopolitical risks and US political uncertainty, with a notable rise in gold and silver prices [10][11] - Central bank demand for gold remains strong, with China's PBOC increasing its reserves by +30,000 ounces to 74.15 million troy ounces in December, marking the fourteenth consecutive month of increases [16] - Fund demand for precious metals is robust, with gold ETF holdings reaching a 3.5-year high, although silver ETF holdings have seen some liquidation recently [17]