- The Japanese Yen (JPY) rises amid a risk-off mood
- US stocks fall on AI overvaluation fears
- The US Dollar (USD) rises versus major peers
- Safe haven bets and lower Fed rate cut expectations lift USD
The US dollar Japanese yen (USD/JPY) exchange rate is falling after a flat finish yesterday. The pair rose 0% in the previous session, settling on Monday at 154.21. On Tuesday at 21.30 UTC, USD/JPY trades -0.41% at 153.58 and trades in a range of 153.32 to 154.48.
The Japanese yen rose on Tuesday, boosted by safe-haven flows amid tanking risk sentiment. The safe-haven was the strongest FX major on a risk-off day, with the USD close behind.
The Nasdaq closed 2% lower, led by tech stocks, on concerns about stretched valuations. Warnings from the CEOs of Goldman Sachs and Morgan Stanley that a pullback could be healthy weighed heavily on market sentiment.
Attention now turns to the Bank of Japan monetary policy meeting minutes, which could limit the upside in the yen, given the more dovish-than-expected statements from BOJ governor Ueda at the meeting.
The US Dollar is falling versus the yen but rising versus its major peers. The US Dollar Index, which measures the greenback against a basket of major currencies, is rising 0.3% at 100.19, marking a three-month high.
The U.S. dollar is rising against its major pairs, boosted by safe-haven flows, although not to the same extent as the Japanese yen.
The dollar has also been supported by reduced expectations surrounding a Federal Reserve rate cut in December. Divisions in the Federal Reserve have raised doubts over the prospect of another rate cut this year. Since Federal Reserve chair Jerome Powell’s hawkish stance last week, officials have offered competing views on where the economy stands and the risks it faces in the absence of economic data.
The markets are pricing in a 65% chance of a rate cut in December, down from 90% a week earlier.
Tomorrow, attention will be on the ADP private payroll as private reports offer the only insight into the health of the market and the economy amid the ongoing shutdown.