Yen trades near five-month peak on risk aversion

The yen rose in Asian trade on Monday against a basket of major rivals, resuming gains against the dollar and about to touch five-month highs on risk aversion as traders buy up safe havens. 

The gains are boosted by a drop in US 10-year treasury yields following weak labor data, which bolstered the case for a Fed rate cut in the first half of the year.

The Price

The USD/JPY pair fell 0.55% today to 147.09 yen per dollar, with a session-high at 147.94.

The yen closed down 0.1% on Friday against the dollar, marking the first loss in three days on profit-taking away from a five-month high at 146.94.

The yen rallied 1.7% last week, marking the second weekly profit in three weeks as US yields dropped. 

Safe Havens

Most global stock markets lost ground amid mounting concerns about the stability of the US economy due to Donald Trump’s aggressive trade policies, in turn hurting the risk appetite.

Investors are worried about slower US growth after aggressive tariffs on major trade partners, while recent labor data and government layoffs raised more concerns. 

President Trump said during a Fox News interview that the US is undergoing a transition phase, with return of wealth to the US through trade and economic policies, including tariffs to boost local industry.

Japanese Rates

The odds of a Bank of Japan interest rate hike in March stood at 65%.

Now investors await more data on Japanese inflation, unemployment, and wages.

US Yields

US 10-year treasury yields fell 1.1% on Monday, pressuring the greenback, amid growing concerns about US growth in the first quarter with the economy adding less jobs than expected in February.

Slower US growth would bolster the odds of a Fed rate cut in the first half of the year.

According to the Fedwatch tool, the odds of a 0.25% Fed rate cut stood at just 3%.