The Japanese yen rose in the Asian market on Wednesday against a basket of global currencies, extending gains for the second consecutive day against the US dollar, moving away from the lowest level in two weeks, amid risk aversion in financial markets, and strong demand for safe-haven assets, due to the wave of sharp losses dominating global stock markets.
The Japanese currency is also supported by the current drop in the yield on ten-year US Treasuries, which comes ahead of the release of important data on the US labor market, which will provide strong clues about the pace at which the Federal Reserve will cut interest rates later this month.
Price Outlook • Japanese yen exchange rate today: The dollar fell against the yen by 0.4% to (144.89¥), from the opening price of today’s trading at (145.47¥), and recorded the highest level at (145.56¥).
The Japanese yen rose 0.95% against the US dollar on Tuesday, the first gain in the last five days, after earlier trading hit a two-week low of 147.21 yen.
A series of weak industrial data in the United States and China has led to escalating concerns about the global economy, which was quickly reflected in risk aversion in most global financial markets.
Kyle Rodda, financial markets analyst at Capital.com, said price movements in global markets show clear features of what appear to be fears of an economic slowdown.
Tuesday’s session on Wall Street saw the worst sell-off in almost a month, as weak manufacturing data in the United States raised concerns about a sharp contraction for the world’s largest economy, with traders already strained ahead of the release of crucial monthly jobs data on Friday.
Global financial markets are tense ahead of Friday’s all-important U.S. jobs report, which most market traders admit will be at least an important factor for whether the Federal Reserve cuts interest rates by 25 or 50 basis points this month.
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“All these sharp moves in riskier assets point to a hesitant view and a clear confusion of safe-haven assets with investors slightly risk-averse.
US Bond YieldThe yield on the ten-year US Treasury bond fell on Wednesday by 0.35 points, extending losses for the second consecutive session, moving away from a three-week high, after the release of weak industrial data in the United States.
Following that data, according to CME Group’s FeedWatch: the pricing of US interest rate cut prospects rose by about 50 basis points at the September meeting, stable from 31% to 41%, and the pricing of the prospects of a cut fell by about 25 basis points from 69% to 59%.
In order to re-price these possibilities, investors are awaiting from today, Wednesday, the release of important data on the labor market in the United States, job opportunities available by the end of July, and Thursday releases US private sector jobs by the end of August and weekly unemployment claims, and Friday releases the August jobs report.
Shrinking the gap on long-term bond yields between Japan and the United States, making Japan’s currency yields an investment target for short buyers and financing.
