Yen and Dollar See gains Investors Seek Safe Havens
The Japanese Yen rose today, hitting a 1-month high versus the Euro, as bad U.S. jobs data released last week intensified fears that the global recession would continue and, as such, reduce demand for higher-risk assets.
The Euro also came under pressure as investors expectations surged because they believe that the ECB would aggressively cut interest rates later this week, in order to shore up its struggling economy.
Shares in Europe retreated in early trading today as investors continued to grapple with Friday's dismal payrolls data from the U.S., which showed that, in the last two months of last year, the world's largest economy shed more that one million jobs.
Serious risk aversion increased demand for lower yielding assets such as the Japanese Yen and the U.S. dollar, while investors moved towards safer assets and liquidated carry trades, where funds are borrowed in Japanese Yen to invest in higher yielding instruments.
On January 12 at 08:30, the Euro lost 0.7% against both the U.S. Dollar and the Japanese Yen and traded at $1.3342 and 120.12 Yen, respectively. The U.S. Dollar fell against the Japanese Yen, losing about 0.2% and traded at 90.08.