Markets face thin liquidity as the U.S., China, Taiwan, and South Korea are on holiday. The Japanese yen dropped 0.2% to 153.07 per U.S. dollar on Monday after rising nearly 3% last week. This jump followed Prime Minister Sanae Takaichi's big election win. Currency trader Brent Donnelly said, "While many thought a supermajority for her LDP party would be negative for Japanese bonds and the yen, the exact opposite happened: They both rallied." He added, "The removal of uncertainty has encouraged long-term investors to dip their toes back in the water. With a bit of stability, those juicier Japanese yields are attracting plenty of interest. So are the Nikkei and the yen. It's called the 'Buy Japan' trade." However, Japan’s economy barely grew, expanding only 0.2% annually in October-December. OCBC expects the yen to be around 149 per U.S. dollar by the end of 2026, citing challenges in shifting the yen from a funding to an investment currency without stronger Bank of Japan rate hikes. In the U.S., January inflation rose less than expected. This cut some urgency for the Federal Reserve to lower rates before June. Kyle Rodda from Capital.com said, "The markets are flirting with pricing in a third cut." Futures show expectations of 62 basis points easing this year, with a 68% chance of a rate cut in June. The euro held steady at $1.1863 and the British pound eased slightly to $1.3638. The dollar index remained stable at 96.959 after dropping 0.8% last week. U.S. bond yields fell, with the two-year hit its lowest since 2022. The Swiss franc softened a bit after rising over 1%, with traders wary of Swiss National Bank action. OCBC strategists noted, "Further Swiss franc gains raise the risk of additional downside surprises relative to the SNB's inflation forecasts. This could potentially challenge the SNB's recent tolerance for currency appreciation."