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Japanese currency reverses earlier weakness, snaps six-day

losing streak

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Authorities in Tokyo reiterate warnings on yen volatility

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U.S. dollar faces busy week ahead of data releases

(Updates markets through Asia morning, recasts first paragraph,

new quote)

By Gregor Stuart Hunter

SINGAPORE, Feb 9 (Reuters) - The yen strengthened in

Asian trading on Monday after Japanese Prime Minister Sanae

Takaichi swept to victory in Sunday's election, abruptly

reversing a six-day string of losses as traders bet fiscal

stimulus will ‌boost the stock market.

The yen overturned a 0.3% decline which saw the

currency reach its weakest level in two weeks to strengthen as

much as 0.7% before paring gains. ​It was last trading 0.3%

firmer at 156.76 yen against the dollar.

The yen also retraced losses against other currencies,

which ‍earlier saw it reach its weakest level on record against

the Swiss franc and trade ⁠near the weakest point since

the ⁠creation of the euro.

"While the initial yen weakness may not have played out,

the outlook for the yen is still one which is likely to struggle

to ‌strengthen," said Sim Moh Siong, currency strategist at Bank

of Singapore in ​Singapore.

"At least in the near term, there's also concern about

intervention risk, which may be capping the upside for

dollar-yen."

Japan's top currency diplomat Atsushi Mimura said

earlier on Monday that the government is "

closely watching currency ⁠movements with a high sense of

urgency

" after Takaichi's coalition ‍swept to a ​historic election

win.

Takaichi is projected to deliver as many as 328 of the 465

seats in Parliament's lower house for her Liberal Democratic

Party. Alongside her coalition partner, the Japan Innovation

Party - known as Ishin - Takaichi now has ‍a supermajority of

two-thirds of seats, allowing her to override the upper chamber,

which she does not control.

"The Liberal Democratic Party's landslide victory removes

political uncertainty and strengthens policy execution, but

shifts market focus squarely to how fiscal policy is designed

and communicated," said Shoki Omori, chief desk strategist for

rates and FX at Mizuho in Tokyo.

"Risks from fiscal expansion had already been largely priced

in before the election," he added. "The key question now is

whether those risks are reinforced or gradually unwind."

The U.S. dollar index, ​which measures ‍the greenback's

strength against a basket of six currencies, was flat at 97.629,

at the start of a week that will see the release of several key

data releases out of Washington, including retail sales,

inflation and Wednesday's delayed ​jobs report.

Traders are increasing their bets on policy easing from the

Federal Reserve later this year. Fed funds futures are now

pricing an implied 19.9% probability of a 25-basis-point cut at

the U.S. central bank's next two-day meeting on March 18, up

from a 18.4% chance on Friday, according to the CME Group's

FedWatch tool.

The pound was last down 0.1% at $1.3599 as markets

considered developments in a political crisis swirling around

British Prime Minister Keir Starmer, whose chief of staff,

Morgan McSweeney, resigned on Sunday. McSweeney said he was

taking responsibility for advising Starmer to name ​Peter

Mandelson as ambassador to the U.S., despite his known links to

Jeffrey Epstein.

Against the Chinese yuan trading offshore in Hong Kong

, the U.S. dollar was last flat at 6.9317 yuan.

The Australian dollar was last up 0.1% at $0.7018,

while the New Zealand dollar nudged 0.1% higher to

$0.6013 and the euro was flat ‍at $1.1818.

Bitcoin was last down 0.3% at $70,454.92, while ether

slumped 0.9% at $2,074.89.