Fundamental Comment

Dollar resumes rebound versus yen as risk appetite improves

Dollar resumes rebound versus yen as risk appetite improves

The U.S. dollar resumed its advance versus the Japanese yen for a fourth straight session on Thursday amid renewed risk appetite in financial markets on the back of the new Chinese stimulus measures.

The USDJPY pair hit a peak of 109.98, the highest since January 22, while it is currently trading at 109.89, resuming its rebound from a low of 108.30 recorded last week.

In general, the USDJPY pair reflects the risk appetite or risk aversion in financial markets, as the yen remains one of the most favorite safe havens during times of panic.

Given the latest turmoil in markets after the outbreak of the Chinese coronavirus that resulted in the death and infections inside and outside China, the yen gained ground over the past two weeks.

However, with relative calmness in markets, stocks, which is high risk investment, managed to recover while the U.S. dollar took advantage of the improvement in economic data and signs of political stability.  

The dollar index climbed to a new top today at 98.19, the highest since early December last year, after strong economic data from the United States.

U.S. ISM manufacturing rose back to positive territory as it registered 50.9 in January from 47.8 in December, and the services gauge climbed to 55.5 last month, marking its highest level since August.

American private employers created a robust 291,000 jobs in January, the highest since 2015, according to the ADP non-farm employment report released on Wednesday, ahead of Friday’s non-farm payrolls.

On the political side, President Donald Trump escaped impeachment attempts last night, as the Senate voted to acquit him 52-48 on charges of abuse of power and 53-47 on obstruction of Congress.

Now, Trump will seek a second four-year term on the November 3 election in a good situation, where a Gallup poll this week showed that Trump’s public approval rating leaped to the highest level of his presidency at 49 percent.

Stock markets continued to rebound on Thursday, as China CSI 300 index edged up 1.86 percent, Hong Kong Hang Seng index added 2.4 percent and Japan’s Nikkei 225 index soared 2.38 percent.

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