The Japanese Yen steadied during the Asian trading session today as FX players shunned the greenback in the wake of falling treasury yields as a result of unexpectedly bleak economic data from the United States. Meanwhile, China has redrawn the focus of investors, and recently released data has increased worries that the second largest economy in the world may be experiencing an economic slowdown. As a result many FX players are expecting that the Peoples Bank of China could put an end to speculative bets on the Chinese Yuan, thus causing a great deal of volatility in the currency.
As reported at 11:24 a.m. (JST) in Tokyo, the U.S. Dollar Index, the gauge by which investors measure the greenback’s weight against its key rivals, dipped to a low of 80.016 .DXY before edging slightly higher to 80.169 .DXY. The USD/JPY hit a low of 102.01 Yen on Tuesday then recovered slightly to 102.33 Yen, far from last Friday’s high of 102.80 Yen.
U.S. Economic Outlook Key
In a note to clients, BNP Paribas analysts said that first quarter of 2014 is likely to continue to paint a dismal picture of the U.S. economy, resulting in lowered treasury yields and increasing bets on U.S. Dollar long positions. Much of the disappointing data is being attributed to very harsh winter weather, and analysts say that the next several months will be very telling as evidence that either supports or questions the Federal Reserve’s decision to curtail quantitative easing.