Dollar Dips Amid Economic Data Woes, Yen Gains as New Japanese PM Takes Charge

The U.S. dollar weakened against major currencies due to slower economic growth indicated by recent data, while the yen strengthened after Prime Minister Sanae Takaichi’s election win. Investors are focusing on upcoming U.S. economic data, and recent trends suggest a shift towards foreign and safer assets amid geopolitical concerns.

The U.S. dollar experienced a decline against major currencies on Tuesday, triggered by data that pointed to a deceleration in U.S. economic growth. In contrast, the yen strengthened following Prime Minister Sanae Takaichi's election victory.

According to the U.S. Commerce Department, retail sales remained flat in December, applying pressure on consumer spending, a significant component of the economy. As data-producing agencies catch up post government shutdown delays, investors seem inclined to shift away from dollar-denominated assets.

Investor focus this week is on forthcoming U.S. data, including employment reports. White House economic adviser Kevin Hassett hinted at potentially weaker job growth ahead. Notably, the yen continued its rally after Takaichi's win, driven by anticipated economic policies, boosting its value against the dollar.

(With inputs from agencies.)