The Japanese yen skyrocketed to a six-month high versus the U.S. dollar on Monday. Stock markets plummeted, and worried investors turned to the Japanese yen due to its safe-haven status.
Wall Street closed lower on Friday. Furthermore, Asian and European stock markets plunged in the red on Monday as the threat of new lockdowns amidst surging COVID-19 disease cases made traders anxious about the economic recovery.
This selloff was similar to what happened in March, with stock markets led lower by banks and travel shares. The dollar gained broadly, while the euro fell, along with government bond yields.
The yen hit 104.065 against the dollar in the early trading on Monday, gaining as much as half a percent. That was the currency’s highest level since March 12.
Raffi Boyadjian, the senior investment analyst at online broker XM, stated that an unrelenting rise in Covid-19 cases globally weighs on sentiment at the start of the trading week. Investors increasingly question their rosy predictions about the global recovery.
However, the greenback rallied in London trade as European stocks plunged to two-week lows, and U.S. stock futures fell. The dollar index gained 0.3% at 93.267 against a basket of peer currencies by midday in London.
Japanese Yen strengthens against the dollar
The yen’s rise was part of a typical risk-off move in markets except for the Swiss franc, which turned weaker – stated Marshall Gittler, head of research at BDSwiss. In its past six sessions, the yen has already gained 2% against the dollar.
Traders are waiting for Federal Reserve speakers’ statements, who may shed light on the U.S. central bank’s new approach to inflation.
Meanwhile, the euro tumbled down by 0.5% versus the dollar, dropping as low as $1.1776 at one point. The British Pound also declined by 0.5% to trade at $1.2849. In Asia, the Chinese yuan stood just below a 16-month high. It lifted by nearly 6.5% in four months.
COMMENTS