The Japanese yen strengthened against the US dollar during Wednesday’s Asian session, recovering from a near three-week low as early US midterm results showed Democrats on course to control both chambers of Congress.
The prospect of a divided government, raising expectations of tighter constraints on future fiscal spending and borrowing, pulled US Treasury yields lower.
Japanese government bond yields rose, led by longer maturities, narrowing the rate gap in favour of the yen.
Oil prices held near their lowest levels in several weeks on hopes of diplomatic progress in the Middle East, easing both Japan’s import bill and US inflation worries. However, the yen’s gains could remain limited as markets continued to price in a December Fed hike.
Looking ahead, the yen’s direction will depend on today’s US ADP and ISM services data, the Treasury’s refunding announcement and Friday’s jobs report. Soft US data would extend yen gains, while strong figures could cap them. In Japan, attention turns to the BoJ’s minutes and PMI figures.
Leave a Comment