Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Yen Kicks Off 2020 With an Advance as Treasury Yields Slide

Published 01/03/2020, 01:39 AM
Updated 01/03/2020, 05:11 AM
© Reuters.  Yen Kicks Off 2020 With an Advance as Treasury Yields Slide
BK
-
US10YT=X
-

(Bloomberg) -- The yen touched its strongest level against the dollar since November in the first full trading day of the year as Treasury yields slid and stocks pared gains.

Japan’s currency was up about 0.2% Thursday at 108.52 per dollar, after touching 108.21, the strongest since Nov. 4. The yen appreciated against all its major peers, though the gains came in thin trading with Japanese markets still shut for the New Year. The 10-year Treasury yield fell as much as 7 basis points to 1.85%, the lowest since Dec. 16.

Although a major catalyst was lacking for the day’s trading, history shows that January has proven to be a good time to buy Japan’s currency. The yen has climbed versus the dollar this month in seven of the last 10 years. Global investors tend to sell dollar holdings at the start of the year to make fresh investments overseas, a seasonal pattern that supports the case for a stronger yen.

“The yen is an interesting currency because it still has attractive qualities as a safe haven and risk dampener,” said John Velis, a strategist for Bank of New York Mellon (NYSE:BK). “The pro-yen story is that we will still get bouts of risk aversion this year” that could drive the currency higher.

Traders do have geopolitical tensions to be wary of. In North Korea, Kim Jong Un said he was no longer bound by his pledge to halt major missile tests, while tensions have also escalated in the Middle East.

With Japan’s markets still shuttered and liquidity low, investors are on edge about the possibility of unusual swings in the yen, as seen in a similar trading environment a year ago, when it gyrated wildly and surged against its counterparts. By mid-day in New York on Thursday, the yen had already given up much of its gains versus the dollar.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.