In the Tokyo foreign exchange market, the yen exchange rate was 1 dollar = 145.23 to 145.27 yen at 8:30 a.m., down 1.76 yen from 5 p.m. the previous day.
The yen sharply increased to one dollar = 145.55 yen. As a result, the Nikkei Stock Average, which plunged on the previous day, rebounded sharply to ease investor sentiment, fueling the yen’s sell-off.
The U.S. ISM July Purchasing Managers’ Index (PMI) came out on the 5th, up 51.4 from the previous month and exceeding market expectations.
It also exceeded 50 which distinguishes between economic expansion and economic reduction. The improvement in the economic sentiment eased excessive pessimism surrounding the U.S. economy.
The U.S. long-term interest rate temporarily fell to 3.66% and fell to a low level for the first time in a year and two months since June 2023, but has since finished at 3.79% as the weekend due to the sale of U.S. bonds. The observation that the U.S.-Japan interest rate gap is heading for a reduction is calming down for now.
As of 9:36 a.m., the yen was trading at 2.14 yen and 1.49 percent lower at $1. = 145.61 to 145.65 yen.
In the Sydney foreign exchange market in Australia, the yen exchange rate started at USD 1 = 143.75 yen to 143.85 yen, up 5.40 yen from the 2nd, taking over the overseas market trend.
Earlier on the 5th (local time), the yen exchange rate rose sharply for the fifth trading day in the New York foreign exchange market, closing at USD 1 = 144.15 to 144.25 yen, up 2.30 yen from the 2nd.
Wary of the U.S. economy, slowing employment, and global stock price declines have led to yen buying and dollar selling.
As the U.S. long-term interest rate fell sharply due to the prospect of the Federal Reserve System (Fed Fed) actively easing the economy, it encouraged the buying of yen and selling of dollars in consideration of the reduction of the interest rate gap between the U.S. and Japan.
According to the U.S. employment statistics for July, the number of employees did not increase as expected in the market, and the unemployment rate also rose. Major stock markets including Japan, Europe and the U.S. plunged on Tuesday.
The U.S. long-term interest rate fell to 3.66% during the day, falling to a low level since June 2023. As risk aversion sentiment strengthened, buying flowed into the low-risk currency, the yen.
The market pointed out that although it is not at the level of a crisis like the COVID-19 shock, the yen was bought with a fierce momentum from concerns over a global economic recession.
On the 6th, the yen is falling sharply against the euro in the Tokyo foreign exchange market. As of 9:32 a.m., 1 euro = 159.49 to 159.48 yen, down 2.37 yen and 1.50% from the previous day.
The euro is edging higher against the dollar. At 9:32 a.m., it was 1 euro = 1.0951 to $1.0952, up $0.0003 and 0.02% from the previous day.
EJ SONG
US ASIA JOURNAL
