Yen Surges to Two-Week High as Investors Seek Safety

5 Apr 2024 , 09:57 AM

After rising from a two-week low, the US dollar remained stable vs other major currencies on Friday as traders grew wary of Middle East tensions and prepared for an important jobs report that was scheduled for later in the day.

Although it is still near the 152 level, the yen rose to a two-week high versus the US dollar due to safe-haven bids and new cautions from Japanese officials.

Major currencies, however, appeared rather muted overall on Friday ahead of the March nonfarm payrolls report.

The dollar had a wild week, plunging from a five-month high to a two-week low as forecasts of lower interest rates were bolstered by an unanticipated slowdown in U.S. services growth.

The dollar recovered from its overnight decline thanks to remarks made by Minneapolis Federal Reserve President Neel Kashkari suggesting that if inflation stays low, rate cuts might not be necessary this year.

Nevertheless, authorities, such as Fed Chair Jerome Powell, have mostly persisted in emphasising the need for additional discussion and information prior to interest rate cuts.

The employment report and the upcoming inflation figures, which arrive next week, will have a significant impact on the prognosis for the Federal Reserve’s policy meetings on April 30-May 1 and June 11–12. Scientists predict that March will see 200,000 new jobs added.

The dollar index, which compares the value of the US dollar to a basket of key world currencies, was mostly constant at 104.18 last week.

Middle Eastern geopolitical unrest has traders on edge as well. On Thursday, US President Joe Biden issued a threat to withhold support for Israel’s attack in Gaza until it took decisive action to save civilians and humanitarian workers.

According to economists, this has caused some safety bids to enter the yen.

The Japanese government is still hammering away at excessive currency weakness at the same time.

On Friday, Japanese Finance Minister Shunichi Suzuki reaffirmed the government’s commitment to responding appropriately to the severe declines in the value of the yen.

As the Asahi newspaper reported on Friday, Bank of Japan Governor Kazuo Ueda stated that the central bank could “respond with monetary policy” if the country’s inflation and wages are negatively impacted by currency depreciation in a way that is difficult to ignore.

The yen rose 0.29% against the US dollar, reaching a two-week high of 150.92.

At $1.0835, the euro remained unchanged, and the most recent price of sterling was $1.26405.

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