Bitcoin jumps while Japan holiday dulls most currencies

SINGAPORE (Reuters) – Bitcoin surged to a one-month high on Monday, continuing its upward momentum following the Federal Reserve’s significant rate cut last week. In contrast, the yen and most other major currencies remained largely flat as Japanese markets were closed for a holiday.

The dollar gained strength against the yen after policy meetings in both the U.S. and Japan, reaching a two-week high of 144.50 yen, and was trading around 144.08 early Monday.

Last week’s Fed rate cut “seems to have eased fears of a U.S. recession,” according to a note from Goldman Sachs. “Our G10 FX team anticipates a mild recovery for the U.S. dollar over the next three months, followed by a decline over a six- to twelve-month period.”

Traders in Fed futures are predicting 75 basis points of rate cuts by the end of this year, with a total of 200 basis points of cuts by the end of 2025, bringing the Fed’s policy rate to 2.75% by that time, according to CME FedWatch.

The U.S. Treasury yield curve has been steepening after the Fed’s rate cut, and market speculation has increased for another large cut, especially after Fed Governor Christopher Waller expressed concern on Friday that inflation might soon fall well below the central bank’s 2% target.

Additionally, most economists surveyed by Reuters expect the Fed to implement two more 25 bps rate cuts in its final meetings this year.

In weekend news, U.S. House Republicans introduced a temporary three-month bill to prevent a government shutdown.

Regarding the yen, the upcoming ruling party vote to elect a new prime minister later this week complicates the Bank of Japan’s plans. A snap election is anticipated in late October, and candidates from the Liberal Democratic Party vying to replace Prime Minister Fumio Kishida have varying stances on monetary policy.