Yen Gains Momentum as Hopes for G7 Incentives Fade


The safe haven Japanese currency rose against the greenback on Tuesday, as market expectations for incentive measures from leading central banks gave way to concerns over their scale and effectiveness in offsetting the coronavirus outbreak effects.

yen rises to dollar euro slipsPhoto: Flickr

G7 finance ministers and central bank representatives will hold a conference call on Tuesday to discuss incentive steps in an effort to tackle the Covid-19 epidemic and its growing economic impact.

The greenback decreased by 0.24 percent against the Japanese yen at 0857 GMT, to 108,06, whereas it pared early losses to the Swiss franc, after Reuters announced, citing an unnamed G7 official, that the draft statement of the G7 does not contain information on new monetary policy measures, having added 0.08 percent, to 0.9589. An official G7 statement will follow on Tuesday later or Wednesday.

The U.S. dollar turned to be under pressure also because the Fed’s rate is in the range of 1.50-1.75 percent, unlike zero level in Europe, which gives the Federal Reserve more space for retaliatory incentives that could affect the profitability of the greenback.

However, fears limited the solid growth of currencies besides the euro, which grew as investors closed their carry trade positions. The single currency eased versus the U.S. counterpart by 0.32 percent, to 1.11126 at 0906 GMT.

Meantime, the Aussie jumped by 0.17 percent, after the RBA sliced interest rates by 25 bp, as it was expected, and not deeper, as some market participants awaited. However, then the currency lost the earlier achieved growth and remained at the level of $0.6552. The Kiwi, meanwhile went down to its U.S. peer by 0.10 percent, to 0.6257.

The investors focus on Tuesday remains inflation data in the eurozone, due to be posted at 1400 GMT, as well as the results of the “Super Tuesday” in the U.S., when the primaries will be held immediately in 14 states.

Source: Reuters


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