The Japanese Yen edged off of a recently struck 5-year trough against the U.S. Dollar and the common currency Euro as softness in Japanese equities gave traders a good reason to buy the safe haven currency. In early trade on Monday, the Nikkei, Japan’s benchmark equity index, fell by 2% which spurred the Yen purchasing spree which was already in progress as a result of short covering needs, according to one currency strategist in Singapore. Traders in Japan don’t believe that the Dollar’s decline is going to be a long term one and are still betting that the greenback will range between the 104-106 Yen levels over the course of the month, though traders will likely watch closely for further falls in the Nikkei ahead of the upcoming sales tax increase which could impact the Yen.
As reported at 12:19 p.m. (JST) in Tokyo, the USD/JPY pair traded at 104.38 Yen, a loss of 0.5% and edging away from Last Thursday’s 5-year peak set at 105.45 Yen. The EUR/JPY also lost about 0.5% to trade at 141.79 Yen, slipping from a 5-year peak established late last month. The Yen was also broadly higher in other crosses, including against the Pound Sterling and Australian Dollar which traded at 170.85 Yen (down 0.7%) and 93.36 Yen (down 0.4%), respectively.
Fed Outlook Gauged
As the first full week of trade begins, investors will watch the U.S. data releases for hints about the Fed’s timing and the U.S. Dollar’s direction. On Wednesday, the minutes from the Fed’s December meeting are due to be released while on Friday the all important private sector jobs report will be released, both of which will help gauge Fed temperment. Currently, the U.S. Dollar Index is holding near to a 1-month peak and trading at 80.860 .DXY.