Yen surges to 7-month high as U.S. economy worries weigh on

The Japanese yen reached its highest level against the US dollar since January on Monday, following recent weak US labour data that raised concerns about a recession and potential rate cuts by the Federal Reserve.

The market sell-off continued on Monday, with US Treasury yields dropping, stock indexes declining, and the dollar weakening against the yen.

The yen, a popular carry-funding currency, strengthened by 3.4 per cent to 141.675 per dollar before easing to 143.165, trading near its strongest level since early January.

The dollar fell 0.5 per cent against major currencies to 102.62, a nearly five-month low.

Concerns about a US recession have shifted market expectations towards stimulative monetary policy, leading to a rise in low-yielding currencies.

The yen has surged 14 per cent against the dollar in the past three weeks, driven in part by the Bank of Japan’s rate hike and bond purchase reduction plan.

The Swiss franc, another carry-funding favourite, also rose by more than 1 per cent against the dollar to a seven-month high.

High-yielding currencies like the Indian rupee and Mexican peso declined, while safe-haven currencies like the yen and Chinese yuan strengthened.

Market uncertainty has been further fuelled by geopolitical tensions in the Middle East, with the US military deploying additional forces following threats from Iran and its allies.

Oil prices have dropped to their lowest levels since January amid escalating tensions in the region.

Attribution: Reuters