The U.S. dollar fell to a two-week low against the Japanese yen on Thursday, pressured by growing fiscal uncertainty and a weak Treasury bond auction. At the same time, Bitcoin surged to a new record high as investors shifted away from traditional U.S. assets amid rising economic unease.
Investor confidence was rattled by a lackluster 20-year bond sale, reinforcing the bearish sentiment surrounding U.S. financial stability. This comes just a week after Moody’s downgraded the U.S. credit rating from its top-tier AAA status, amplifying Wall Street’s concerns.
Bitcoin Rally Accelerates, Gold Gains Ground
Bitcoin soared to an all-time high of $110,636.58 before settling slightly lower at $110,049.82, up 1.6% on the day. The surge reflects increasing investor interest in alternative assets amid a weakening U.S. dollar and volatile equity markets.
Gold also climbed, reaching a near two-week high of $3,325.79 per ounce — just $175 shy of its April peak — as demand for safe-haven assets rose.
“Despite falling stock markets, the dollar has not attracted its usual safe-haven flows. Instead, investors are turning to gold, the euro, and the yen,” said James Kniveton, Senior Corporate FX Dealer at Convera. He added that skepticism remains over the U.S. government’s ability to impose fiscal discipline as it pushes new spending and tax-cut legislation.
Debt Debate Sparks Political Division
President Donald Trump is trying to push a sweeping fiscal package through Congress, but divisions within the Republican Party persist. House Speaker Mike Johnson noted that some conservative lawmakers argue the bill does not go far enough in reducing federal spending.
Independent analysts estimate the proposed legislation could add between $3 trillion and $5 trillion to the national debt — a projection that’s further weighing on investor sentiment.
Dollar Weakens Despite Global Talks
The dollar slipped to 143.27 yen in early Asian trading, its lowest point since May 7. This decline followed a brief uptick of 0.5% after Japanese Finance Minister Katsunobu Kato stated that currency levels were not discussed with U.S. Treasury Secretary Scott Bessent during recent G7 meetings in Canada.
The muted market reaction suggests investors remain cautious, suspecting that the White House may favor a weaker dollar to support trade competitiveness, particularly against Asian currencies.
Asian and European Currencies Hold Steady
South Korea’s won surged to 1,368.90 per dollar on Wednesday — its strongest since November 4 — after reports emerged that Washington urged Seoul to take measures to strengthen its currency. By Thursday, it had eased slightly to 1,377.00.
Meanwhile, the euro held steady at $1.1330 after posting a 0.4% gain on Wednesday, marking its third straight day of advances. The British pound remained flat at $1.3426, while the Swiss franc edged up 0.1% to 0.8245 against the dollar.