The Japanese Yen continues to be soft and touched on a 10-week trough versus its safe haven rival, the U.S. Dollar, as investors risk appetite remains high as traders speculate that China’s central bank might soon be providing additional stimulus in order to put growth back on track. The greenback also got a solid boost from a rally on Wall Street which sent yields on U.S. Treasuries higher as well and FX strategists believe that the combination of higher yields and a global equities rally is enough of a catalyst to push the USD/JPY pair higher, possibly even to the 105 level. Market players remain wary of the Yen given this week’s implementation of a sales tax increase by the Japanese government which many believe could impact consumption and thus force the government to further weaken the currency.
As reported at 11:36 a.m. (JST) in Tokyo, the USD/JPY pair dipped to 103.84 Yen, edging off a high of 103.935 Yen; meanwhile the EUR/JPY remained close to a 3-week peak at 143.46 Yen. The EUR/USD edged higher to $1.3804, moving away from Friday’s 1-month trough of $1.3704.
ADP Labor Data Eyed
Later today, the market’s focus will be on the release of the ADP labor data which tends to presage the government’s official report due out on Friday. That could provide some hint as to the possible direction the Federal Reserve might take at their next meeting.