The Japanese Yen inched higher to a 7-week peak versus its key rival, the U.S. Dollar, following a sell off of currencies from emergent markets around the globe. While currency analysts point out that some of the sell offs occurred as a result of problems within their respective domestic markets, many agree that a key factor was growing concerns that the Federal Reserve’s monetary policy change to a more tightened posture could shift back excess cash to the United States and turn into yet another financial crisis. Moreover, what fears of a continued slowdown in growth in China’s economy is also making markets jittery.
As reported at 10:40 a.m. (JST) in Tokyo, the USD/JPY pair traded at a session low of 101.77 Yen which is a level not seen since early last month; afterward the pair recovered to 102.04 Yen. The Dollar is still, however, showing a loss of 0.3% from late trading in New York on Friday and has lost 2.4% against the Yen over the last three consecutive trading sessions. The Swiss Franc also saw safe haven action, trading higher against the Euro at 1.2234 Swiss Francs, and against the greenback at 0.8941 Swiss Francs.
Investors Buying Dollar at the Dip
The Dollar is getting some support against the Yen with Japanese importers and U.S. investors buying the greenback at its recent lows. Markets will be very cautious of how the Fed is likely to proceed in the wake of this selloff given that its monetary policy is most effective when the global banking system is healthy, and a continued global sell off as a result of jittery market players could produce unwanted results.