The yen regained its footing on Friday as traders swooped back into the Japanese currency after its worst four-day run in more than two years.
The yen had lost 2 percent against the US dollar in the previous two days alone as worries about the effects of the COVID-19 outbreak on Asia’s major economies spread.
An early burst in London pushed it up as much as 0.5 percent to ￥111.48, though it had edged back slightly to ￥111.90 by the time the first New York trades trickled in. It ended the day at ￥111.55, down 1.6 percent for the week against the greenback.
“Traditionally, the support for the yen comes from two sources, general risk-off sentiment and a move to safe-haven bonds,” Saxo Bank A/S head of foreign-exchange strategy John Hardy said.
“The question is whether recent dollar/yen spike higher could be a one-off move triggered by order flows and algorithm trading or whether it is something else. This is a very interesting test of whether we are seeing regime change,” Hardy said.
On the other side of this week’s moves has been a huge charge from the US dollar, which has had its strongest start to a year since 2015.
It was down 0.2 percent against the major currencies by noon, but only after the closely tracked US dollar index touched a three-year peak overnight. It ended the day with a 0.5 decline at 99.34, up 0.2 percent for the week.
In Taipei, the New Taiwan dollar fell against the US dollar, losing NT$0.149 to close at NT$30.403. For the week, it was up 1.2 percent against the greenback.
The euro has been shoved down to a near three-year low, the Australian dollar traded at an 11-year low of US$0.66 overnight and the Chinese yuan was sitting at a two-month low of 7.0286 per dollar.
The tourism-exposed Thai baht dropped 5.5 percent this week, the Hong Kong dollar slipped down its controlled band, while the South Korean won and Singaporean dollar shed more than 4 percent.
The Mexican peso has been ripped down 2.5 percent after holding up relatively well for emerging markets traders recently.
“New [coronavirus] cases in [South] Korea and in Japan, [have] obviously given some people a little bit of cold feet regarding Japan and the yen as a safe haven,” HSBC Holdings PLC global head of foreign exchange David Bloom said.
The euro saw a modest rise to US$1.0817 after IHS Markit’s eurozone composite flash purchasing managers’ index rose to 51.6 this month, beating all forecasters polled by Reuters.
The fastest rise in British factory output in 10 months also helped sterling end an otherwise tough week on a high as it climbed 0.4 percent against the US dollar and 0.25 percent against the euro to US$1.2930 and ￡0.835 per euro respectively.
Additional reporting by CNA and staff writer
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