Forex

Yen firms as risk appetite fades; pound fragile

Reuters Tokyo | Updated on August 29, 2019 Published on August 29, 2019

File photo   -  Reuters

The yen is set to gain 2.5 per cent against the dollar in September, putting it on track for its biggest monthly rise in three months.

The Japanese yen edged higher on Thursday, heading for its biggest monthly rise since May as risk appetite remained on the back foot with investors sceptical on the prospect of a trade-war breakthrough any time soon.

“Investors are still concerned about the trade war and there is little optimism we will see a substantial breakthrough in negotiations,” said Esther Maria Reichelt, an FX strategist at Commerzbank.

US President Donald Trump's administration on Wednesday made official its extra 5 per cent tariff on $300 billion in Chinese imports and set collection dates of September 1 and December 15.

Against the greenback, the yen edged 0.2 per cent higher at 105.83 yen. For the month, it is set to gain 2.5 per cent against the dollar, putting it on track for its biggest monthly rise in three months.

“It's very difficult to take on any kind of major risk in this environment,” said Chris Weston, head of research at forex brokerage Pepperstone Group, pointing to the inverted yield curve as an indicator of sentiment.

Spreads between 10-year US Treasury debt and comparable two-year bond yields inverted to minus 3 bps, its lowest since May 2007.

Sterling remained in the spotlight after Prime Minister Boris Johnson's plan to suspend Parliament raised the odds of a no-deal Brexit. The British currency edged a quarter of a per cent lower at $1.2183, approaching a January 2017 low below $1.20.

 

 

Published on August 29, 2019
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