Yen Slumps Amid Political Shifts and Oil Market Volatility

The yen hit a three-month low following Japan's ruling party losing a parliamentary majority while oil prices tumbled. The political shift threatens Japan's economic policies with a dovish move expected. The broader currency markets remained steady, and stronger U.S. economic signs could slow interest rate cuts.

In a significant market shift, the yen fell to a three-month low as Japan's ruling party lost its parliamentary majority. This political upheaval, marked by the Liberal Democratic Party's weakest outcome since 2009, reflects potential changes in economic strategy, with expectations for dovish fiscal policies going forward.

Oil prices also reacted to geopolitical tensions, with Brent crude futures dropping by 5% after Israel refrained from targeting energy sites in response to Iranian actions. The currency markets remained steady overall, with the dollar showing signs of strength amid expectations of strong U.S. economic performance.

As investors assess the financial landscape, the impact of a potential second Trump administration continues to influence U.S. yields, while gold remains near record highs. A significant week lies ahead with key data releases and earnings reports from major tech companies.

(With inputs from agencies.)