The Japanese Yen was broadly higher against its major peers as investors’ fears escalate on speculation that the global economy is on the verge of a downturn. Investors’ jitters extended as well to the U.S. Dollar, despite the fact that the greenback had been rallying rallied in recent weeks given the overall improvement in the U.S. economic picture and the growing expectations that the Federal Reserve Bank would soon begin raising interest rates. The Federal Reserve, in fact, cautioned investors over the past weekend that if the recovery in global health faltered, it might push back the timing on an interest rate hike.
As reported at 7:57 a.m. (BDT) in London, the USD/JPY was trading lower at 107.38 Yen, a fall of 0.3%, recovering slightly from a session low at 106.06 Yen, the lowest price in nearly a month and far off the 6-year peak struck on October 1st when the pair hit 110.09 Yen. The EUR/JPY was also lower, trading at 135.90 Yen, after earlier hitting an 11-month trough at 135.56 Yen; clear problems with growth in the Eurozone’s regions, including within its economic driver Germany, are likely to lead to a Euro that is under exceedingly strong pressure and likely to continue weakening against its major peers.
Yen Demand Higher as Risk Aversion Grows
Though markets in Japan were closed for a holiday and with bond markets closed in New York, trading in the Yen is likely to continue to escalate in the near term. FX traders confirm that the move among them has been toward risk-off, and the Yen, with its low yields, is favorable for carry trades and funding of higher yielding investments.