- The Japanese Yen (JPY) drops sharply
- Debt worries and rising borrowing costs hit the yen
- The US Dollar (USD) rises versus its major peers
- US rises on safe haven flows
The US dollar Japanese yen (USD/JPY) exchange rate rose for a third straight day on Tuesday. The pair rose 0.09% in the previous session, settling on Monday at 147.18. On Thursday at 21:30 UTC, USD/JPY settled 0.78% higher at 148.33 and traded in a range of 147.09 to 148.94.
The yen dropped sharply on Tuesday, weighed down by concerns over rising debt levels, sending borrowing costs surging. The long-term bond yields are stalling the yen’s ability to benefit from its typical safe-haven role.
Heightened political uncertainty also remains a drag on the end, as well as a lack of hawkish policy signals from the deputy governor of the Bank of Japan.
The US dollar rose across the board. The US dollar index, which measures the USD against a basket of peers, rose 0.57% on Tuesday after a flat end yesterday.
The USD Quote has clawed back some ground, recovering from a five-week low on safe-haven flows and following a slight improvement in manufacturing activity.
The USD is benefiting from a selloff in the GBP, EUR, and JPY amid concerns over government debt. US stocks sell sharply in the risk-off mood, and safe-haven Gold reached a record high above 3500.
The US ISM manufacturing PMI came in at 48.7 in August, up slightly from July but still below the 49 that economists had expected, meaning the sector remained in contraction territory. This is a sector that Trump is watching closely as his trade policies aim to bring manufacturing back to the US.
This week is a big week for US data, with ISM services PMI, JOLTS job openings, and non-farm payrolls in focus. The data comes as the market is pricing in a 90% probability of a 25 basis point rate cut this month.