The Japanese yen hit a seven-week high against the U.S. dollar and a three-year peak against the Euro on Wednesday. Investors are concerned due to the court decision challenging German participation in Europe’s stimulus program. And the forecasts about the global recovery aren’t very hopeful either.
Germany’s highest court gave the European Central Bank three months to justify purchases under its bond-buying program on Tuesday. If not, ECB will lose the Bundesbank as a participant in a scheme aimed at weakening the economic blow from the pandemic.
The Euro plummeted down to a one-week low of $1.0826 due to this news. And it fell to a three-year low of 115.09 yen in Asian trade, as investors worried about both the scheme and eurozone turbulence. On the other hand, the pound was also steady at $1.2431.
The yen also climbed up against the dollar, trading at 106.22 by the end. However, other major currencies were stranded as concerns about U.S.-China tensions and dire economic indicators held optimism for recovery in check.
Kit Juckes, the head of FX strategy at Societe Generale, stated that the safe-haven yen had been the pick of the major currencies after the crisis started, and that will probably continue.
So far, the yen is up by nearly 6% on the Euro and about 2% on the dollar for the year. It skyrocketed to a three-week high against the Korean won on Wednesday as well. Furthermore, the currency is not far from a month high against the Australian dollar.
What about other Asian currencies?
The Aussie last traded at $0.6432 and the New Zealand dollar at $0.6052. Both of them were steady on the greenback, above 64 cents and 60 cents, respectively.
Meanwhile, Chinese yuan has recovered some ground lost recently, at a month-low 7.0885 per dollar. U.S. President Donald Trump blamed China for the outbreak of coronavirus. Investors are awaiting a response from Beijing to Trump’s comments, which included a threat of fresh tariffs on Chinese goods last week.