The yen managed to rise against all of its 16 major counterparts in Asian Tuesday trading, increasing its appeal to investors as a safe-haven currency, especially after a sell-off in emerging markets.
The Japanese currency extended its Monday advances against the US dollar this morning and was trading at 98.02 at the time of writing. Several events took their toll on the greenback’s performance. The latest developments in the Syrian crisis sparked concerns that the United States might engage in possible military actions in the Middle East.
Periods of financial and economic turmoil usually have a positive impact on the yen since Japan does not use foreign capital for funding its deficits.
More pressure came from unfavourable US economic data released yesterday. A report showed that orders for long-lasting US manufactured goods fell 7.3% in July, registering their biggest drop in almost a year, compared to a rise by 3.9% for the previous month, thus casting a shadow on the US economy’s performance.
Meanwhile, the euro dropped further against the dollar on Tuesday morning, trading at 1.3331, compared to its yesterday’s intraday high at 1.3389. This morning also saw the release of the German Research Institute’s IFO reports on business climate and current conditions for August. The data proved to be impressive, showing a 16-month high, with actual figures as follows: Business Climate – 107.5, Current Assessment – 112.0, and Expectations – 103.3. However, the positive news failed to give the euro an instant boost, and in fact the single currency dropped after their release. Analysts commented on the chart’s reaction that investors had not expected such strong results since they consider the Eurozone’s recovery to be relatively weak, and need more time to ‘digest’ the news.
Elsewhere, the Australian dollar declined further against other currency counterparts, plummeting to a 5-day low and trading at 0.8946 at the time of writing.
The British pound is also on the slide for the past five days, falling to 1.5502 against the US dollar at the time of writing.
Looking further in the day, the economic calendar lacks some lackluster data, with more attention being given to the US Consumer Confidence for August, due later today.
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