The Yen Is Still on Track for Its Worst Weekly Loss Since June, the Dollar Got Knocked Down

The dollar got knocked down against the yen on Friday, losing ground against other major currencies, thanks to some pretty ugly housing data out of the U.S.

The dollar took a hit against the yen on Friday, also losing ground against other major currencies, as dismal housing data from the U.S. had investors, who are keeping a close eye on the next move by the Federal Reserve on interest rates, worried.

U.S. single-family home construction activity plunged in July as higher mortgage rates and rapidly rising home prices deterred potential buyers in a market that’s already limping along.

The greenback dropped 0.96% versus the yen, hitting 147.87, down from a two-week high of 149.40 reached the previous day. But don’t get your hopes up if you’re betting on the yen, as it was still set for its worst weekly loss since June.

The latest U.S. economic data has eased fears of a recession, which in turn gave traders a reason to bet on the gradual cutting of rates rather than anything more drastic.

Last week saw a dramatic shift from August 5, when the yen soared to 141.675 per dollar after the Bank of Japan überraschend raised rates.

That move, along with U.S. recession fears, had traders rushing to unwind yen-carry trades.

But things calmed down after Shinichi Uchida, deputy governor of the Bank of Japan, attempted to ease market nerves by saying they wouldn’t be tinkering with rates at a time of such market shakiness.

Since then, it appears traders have begun rebuilding their short positions. Meanwhile, Japanese investors have been making their own moves. In the week leading up to August 10, they poured the most money into long-term overseas bonds that we’ve seen in 12 weeks.

And get this: Foreign investors shifted back to buying short-term Japanese debt after dumping it for eight consecutive weeks.

The stock market also saw activity, with foreigners buying up about $3.5 billion in Japanese shares, reversing three weeks of net selling.

Earlier this month, weaker-than-expected payroll data had traders pricing in a higher chance of a 50-basis-point cut, with odds reaching 71%, according to the CME Group’s FedWatch Tool. But as of now, those odds have dropped to just 25.5%.

Bitcoin, on the other hand, has shown remarkable resilience, stabilizing after the global market sell-off that dragged it below $50,000.

The launch of spot Bitcoin ETFs in the U.S. in January played a crucial role in keeping Bitcoin afloat amid the market chaos.

Since their debut, these ETFs have seen net inflows of around $17.5 billion, boosting total assets in these funds to $53.5 billion as of press time.

The Grayscale Bitcoin Trust, which transitioned to an ETF earlier this year, has seen inflows of $1.9 billion since the transition. Even the newcomer, the Bitwise Bitcoin Fund, managed to attract $274 million in inflows.

Bitcoin started the year at around $45,000 and saw a major rally, peaking at about $71,000 in May. Since then, the price has fluctuated significantly, but it has recently been holding steady within the range of $63,000 to $65,000.

This stability is somewhat surprising given the volatility that typically follows a Bitcoin halving, which occurred in April. However, Bitcoin has been hovering around $59,400 this past week.

Despite the challenges it has faced this year, Bitcoin seems to be stabilizing—for now, at least.

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