Yen Firms as Japan’s Equities Investors Spooked

The Japanese Yen was broadly and sharply higher following a significant fall in Japan’s stock market which sent investors scurrying for the safe haven currency. On the flip side, higher risk commodity-linked currencies, especially the growth-linked Australian Dollar, were facing renewed pressure as the growing possibility of a global slowdown confronts investors. Recent labor data from the U.S. supports the possibility of just such an outcome, as ADP reported yesterday that private sector jobs growth was unexpectedly sluggish in May; Friday’s release of the Department of Labor’s official data will be closely monitored though analysts now believe that the numbers could be a disappointment to investors.

As reported at 11:14 a.m. (JST) in Tokyo, the USD/JPY pair was trading at 99.14 Yen, a loss of 1% during the Asian trading session, while the EUR/JPY pair dropped to 129.83 Yen, also a nearly 1% fall. The AUD/JPY pair had toppled nearly 3% to trade at 94.18 Yen, a 3-month low. What precipitated the fall in Japanese equities was the failure of the Abe government to announce new and aggressive measures to further stimulate the Japanese economy, an announcement which had been widely anticipated by market players. Analysts believe that if the government fails to react to the rout in Japanese equities that the Yen will continue to appreciate.