Yen hits new lows vs. dollar, euro

by Jonathan Adams

The yen weakened by 0.3% to 161.94 per dollar for the first time since December 1986 and reached an all-time low of 173.80 against the euro

The yen touched a new 38-year low against the dollar and a record low to the euro on Wednesday, as the currency continued its downturn, with Japanese officials largely remaining on the sidelines amid the risk of intervention.

The dollar edged lower against other major currencies, extending Tuesday’s decline after dovish comments from Fed Chair Jerome Powell overshadowed a robust domestic jobs report.

The euro remained strong, helped by a stubbornly high local inflation figure on Tuesday that suggested the ECB would take its time before reducing interest rates again. Sterling was stable ahead of Thursday’s UK election.

The yen weakened by 0.3% to 161.94 per dollar for the first time since December 1986. It also reached an all-time low of 173.80 against the euro.

Japanese authorities have been largely quiet on the yen this week, with Finance Minister Shunichi Suzuki only commenting on Tuesday that moves were being watched vigilantly.

Right now, the forex market is challenging the Japanese authorities to do something. You do get the sense that markets will keep pushing dollar/yen higher until Japan policymakers respond, said Michelle Metcalfe, head of macro strategy at State Street Global Advisors.

Some speculated that the Japanese authorities could act on Thursday, when thin liquidity due to a U.S. holiday would exacerbate market moves.

Analysts have also pointed to the heightened possibility of a second Donald Trump presidency as having an impact on the yen, because Trump’s policies are seen as likely to lead to higher U.S. bond yields, which the dollar-yen pair tends to track.

“A Trump presidency would likely bring higher fiscal deficits, inflation and yields at the mid- to long-end of the U.S. rate curve, countering the impact of Fed rate cuts,” and the increasing risks of that have moved the goalposts higher for USD/JPY, according to Tony Sycamore, a markets analyst at IG.

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of Trading and Investment News. The information provided on Trading and Investment News is intended for informational purposes only. Trading and Investment News is not liable for any financial losses incurred. Conduct your own research by contacting financial experts before making any investment decisions.

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