The yen hit a one-month high as safe-haven demand and a looming Bank of Japan rate hike awaited Fed action.
He dollar touched minima of one month against the yen and came under pressure against other currencies on Thursday, since the growing Concerns about the US economic outlook It underpinned the expectations of a interest rate cut on a large scale by the Federal Reserve next week.
He Yen hit one-month highs, partly because of safe haven demand, but also because of the view that an imminent rate hike by the Bank of Japan – while other central banks are cutting them – could push the Japanese currency higher due to the narrowing of rate differentials.
Global markets on edge over key economic data
The World markets are in turmoil and the stock exchanges, In particular, they have been hit hard by weaker-than-expected data this week in the United States, which revived concerns about less rosy growth prospects than previously thought and that the labor market may be slowing more than expected.
Ahead of Friday’s nonfarm payrolls report, data on private-sector employment, weekly jobless claims and service sector activity are due, which could cause some volatility, according to Fiona Cincotta, market strategist at City Index.
“The Data has the potential to confirm or refute these recession fears. “We’ve seen this looming over the market since the July (jobs) report,” he said. “Sometimes when the market is so nervous about a reading, that’s when we often see a very, very big knee-jerk reaction, which is probably what we’ll see on Friday before we see a more settled response to the data next week.”
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Investors brace for volatility on Friday
The options market shows that Traders are bracing for potentially big currency moves on Friday. Overnight options implied volatility – a measure of demand for protection – is the highest since the March 2023 banking crisis for the euro and the highest in a year for the yen.
On the day, the The dollar was trying to recover some of its losses from the previous day, as traders raised bets on an aggressive Fed easing cycle expected to begin this month. Against a basket of six major currencies, the dollar was slightly lower at 101.14.
The euro was up 0.2 percent at $1.110, while sterling was up a similar amount at $1.3169.
Source: Ambito
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