Fundamental Comment

Yen biggest winner amid drop in major currencies


The Japanese yen gained against the U.S. dollar and other major currencies on Monday, as tensions made the yen the biggest winner in the market given its safe-haven merit.

Current tensions in the financial markets have led investors to risk aversion and resort to safe haven assets, especially as investors have given up trading in gold and silver due to expectations that U.S. interest rates will rise later this week.

The USDJPY pair traded near a one-week low of 105.90 after reaching today’s session's low at 105.67, while it opened at 106.04.

Worries escalated after weekend polls that showed a sharp drop in popular support for Prime Minister Shinzo Abe because of his handling of the growing patronage scandal that raised doubts about his ability to move forward with on monetary easing stance.

Speaking in parliament on Monday, Abe blamed the loss of confidence in his government, but denied any charges of patronage or exploitation of his position.

These developments came ahead of the Fed meeting this week with a 100% forecast that the central bank will raise interest rates by a quarter percentage point to 1.75% from current levels of 1.50%.

The yield on the 10-year US government treasuries rose to a two-week high of 2.92% due to increasing risk aversion and mounting expectations of higher US interest rates.

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