Yen Higher on Risk Aversion
Safe haven currencies, predominantly the Japanese Yen, were driven higher during the Asian trading session, largely on an increase in risk aversion after the US Dollar Index fell as well as another major rout on Wall Street. The subdued outlook of the US economy and the interest rate environment is also weighing on the greenback. The Federal Reserve had signaled the likelihood that there would be far less interest rate increases in the coming years than they had originally foreseen. That helped to push US Treasury yields on longer-term instruments toward a 9-month low.
As reported at 10:2 am (JST) in Tokyo, the USD/JPY was trading lower at 111.16 Yen, a loss of 0.1078%; the pair is moving away from the session trough of 111.089 Yen. The EUR/JPY was trading at 127.306 Yen, down 0.09, while the GBP/JPY was trading at 140.7600 Yen, down 0.07%.
Short Wait for Sentiment Shift
Positive sentiment for the greenback is also eroding under the threat of a federal government shutdown, and the latest surprise defection from the Trump administration. The Secretary of Defense, James Mattis, handed in his resignation to the president today, citing policy differences. Analysts say they don't foresee a market shift to a more positive outlook until after the new year, and believe that equities will largely dictate direction for safe haven currencies as well as the US Dollar.