The US dollar weakened against the yen and other major global currencies, largely driven by negative housing data from the US. Investors, concerned about future Fed actions regarding interest rates, found little cause for optimism in the latest data.
Dollar and Yen Weakening
The dollar fell by 0.96% against the yen, reaching 147.87, down from the two-week high of 149.40 it had hit the previous day. However, the yen is still on track for its worst weekly drop since June. This is due to easing US recession fears, prompting traders to bet on gradual rate cuts instead of more drastic measures.
Forex Market Situation
Last week, the yen surged after an unexpected rate hike by the Bank of Japan. This measure, combined with US recession fears, led traders to reassess their yen-financed carry trades. However, after Bank of Japan Deputy Governor Shinichi Uchida assured that no further rate manipulations were planned amid market instability, the situation stabilized. In the week leading up to August 10, Japanese investors funneled significant funds into long-term overseas bonds, while foreign investors resumed buying short-term Japanese debt after eight weeks of selling. Additionally, foreign investors purchased around $3.5 billion in Japanese shares, ending a three-week period of net selling.
Bitcoin Stability
In the cryptocurrency market, Bitcoin demonstrated resilience, stabilizing after a global meltdown temporarily pushed it below $50,000. The launch of spot Bitcoin ETFs in the US in January helped stabilize the market. Since their debut, these ETFs have attracted about $17.5 billion in net inflows, boosting total assets in these funds to $53.5 billion. The Grayscale Bitcoin Trust, which converted to an ETF earlier this year, has seen $1.9 billion in new inflows. Even the new Bitwise Bitcoin Fund managed to attract $274 million. Bitcoin started the year around $45,000 and peaked at $71,000 in May. Despite significant fluctuations, it has recently stayed within the $63,000 – $65,000 range, showing relative stability.
The current situation in forex and cryptocurrency markets highlights the significant impact of economic data and investor expectations on price dynamics. While the dollar and yen are weakened by various factors, Bitcoin continues to demonstrate resilience amid global instability.
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