Yen climbs as bleak data, uncertainty darken US Dollar outlook
by SOURAV D | VIEW 3418
The Safe-haven Japanese Yen, demand of which usually rises during the times of a jejune socio-economic outlook, climbed to a seven-week peak against its American counterpart on Thursday, as another cascade of dismal data released earlier on the day had vindicated an overall uncertainty brewing over the ailing US economy, while US Fed’s frets over the pace of recovery had added to the glooms in risk-sentiment.
Apart from that, as the world’s third-largest economy, Japan’s newly elected Prime Minister Yoshihide Suga had pledged to continue the momentum obtained during the Abenomics era, the Japanese currency had also surged to its highest level since late-July against the bloc’s common currency, however came off its session highs after the eurozone currency had reversed course against the American Dollar.
US Dollar index came off one-week high as dismal data adds to glooms
In point of fact, the US Dollar Index (DXY), measured against a basket of six major currencies, jumped to a one-week peak earlier in the day, but had pared earlier gains following a late-session sell-off wave, as another set of dismal economic data had weighed on the US currency.
According to the initial jobless claims data released from the US Labour Department, jobless claims remained at a record high of 860,000 last week, while both Philadelphia Fed business index alongside US housing starts had witnessed an unprecedented downturn, as the US Dollar Index had rounded off the day little changed at 93.10 while US Treasuries had pared some of its earlier gains, remarking a ward-off of the risk appetites.
Citing statistics, on the day’s FX market wind down, the US Dollar fell 0.3 per cent to 104.69 yen against its Japanese peer after hitting an intra-session low of 104.52, while the bloc’s single currency remained flatlined to 123.93 yen after touching a late-July low of 123.33 yen per euro.
In tandem, as a majority of Wall St. analysts were quoted saying that the US Dollar strength would unlikely to sustain amid a dovish Fed stance, a managing director at Action Economics in Tampa, Florida, Ron Simpson said on the day’s FX market closure, “The economic outlook is so uncertain -- we’ll have news or events that would say there is a vaccine in October and next that there would be a vaccine at the end of 2021.
Some of the economic numbers were good, some not so good, and so the outlook changes daily”.