By: DailyForex.com
With investors already skittish from Ben Bernanke’s testimony about the timeline for the scaling back of the Fed’s QE program, a rout in global equities which began in Japan and ended in Europe helped send the U.S. Dollar markedly and broadly lower. Unexpectedly dismal data from China’s factory sector also sparked fears in investors that China’s economy is slowing at a pace not initially foreseen and which could impact on the health of the global economy; that news had investors seeking out the safe haven Japanese Yen which rallied against its peers.
At one point in the very early Asian trading session, the USD/JPY pair had traded at 2-week low of 100.82 Yen, a clear reversal of Wednesday’s high of 103.73 Yen which came immediately after Bernanke’s testimony hinted at a pull back of stimulus. The greenback has since recovered and was trading at 102.17 as at 10:33 a.m. (JST) in Tokyo. Some strategists believe that the Yen could see additional gains against the U.S. Dollar in the short term provided that equities continue to suffer a decline but that the longer trend remains intact for a stronger Dollar and a weaker Yen. The EUR/JPY pair had been trading at a 2-week trough of 129.94 Yen, before recovering to 132.34 Yen.