Dollar Bounces Back from a Six-Week Low Against the Yen

The USD/JPY pair bounced back from a six-week low, interrupting the Yen’s momentum. The greenback went up, reaching the 110 mark, against the Japanese currency after dropping to 109.72, its lowest since the decline started on February 11.

The dollar, however, took a hit against the yen on Friday when the inversion of yield curves between 3-month T-bills and 10-year notes occurred. The Yen was up earlier on Monday by 0.15 percent to 109.79 per U.S. dollar and 124.035 per euro respectively, and by 0.2 percent to 77.72 against the Australian dollar.

The president of FPG Securities in Tokyo said “Bad economic data should not come as a real surprise to the markets. But hopes for improvements in Sino-U.S. trade relationships had overshadowed economic woes, and now we are seeing some of the excessive expectations being curtailed.”

“The yen is gaining broadly, albeit by default, under such conditions,” he added.

The greenback gained momentum only a few hours later with the dollar index hitting 96.097, higher than where it was before the Federal Reserve’s policy announcements a week prior to today.

A senior currency strategist at Daiwa Securities in Tokyo said “The dollar’s slide on Friday appeared to have been an algo-led reaction to the yield curve inversion and quite simply overdone. Some bargain hunting by market participants emerged to support dollar/yen.”

The euro, on one hand, was against the dollar at $1.131, a fallback from last week’s $1.145 value, losing roughly 0.7 percent. Worries for the biggest European economy being threatened by a weak German manufacturing PMI figures have arisen.

Higher-yield currencies such as the Australian and New Zealand dollars managed to hold up well at 0.2 percent against the greenback. The British pound, however, was down by 0.1 percent at $1.32 after the EU leaders have given British Prime Minister Theresa May a two-week reprieve to decide on the fate of Brexit.

FSMSmart gives you the latest news updates, market trends, and news about forex, commodities, stocks and many more! Open an account now and learn more about other investment opportunities on FSMSmart.