Yen Dips, Oil Plummets Amid Japan's Election Shakeup and Geopolitical Tension

The yen reached a three-month low as Japan's ruling party lost its parliamentary majority. Meanwhile, oil prices plummeted following Israel's strike on Iran, which did not target oil facilities. Japan's Nikkei initially fell, then rose, while the yen slipped amid expectations of a dovish economic policy shift.

The yen hit a three-month low on Monday after Japan's ruling party suffered a significant defeat in parliamentary elections. The Liberal Democratic Party's (LDP) performance, the weakest since 2009, resulted in a slip of 0.5% for the yen to 153.3 per dollar. Stock markets saw gains led by technology companies as investors anticipated a potential shift in economic policy.

Oil prices tumbled, with Brent crude futures dropping 4.2%, reaching $71.99 a barrel. This decline followed an Israeli strike on Iran over the weekend, which notably avoided targeting oil or nuclear facilities. Instead, the response focused on missile factories near Tehran, leaving energy supplies intact despite escalating geopolitical tensions.

The U.S. currency markets remained steady, placing the dollar on track for its largest monthly rise in over two years amid solid U.S. economic indicators and rising Treasury yields. Investors eagerly await a major week of earnings and reports from tech giants, while upcoming inflation data squares with interest rate predictions.

(With inputs from agencies.)