Stock Market Watch

Forex Market Update: U.S. Dollar Trades Broadly Higher as Equity Markets Calm Down

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The U.S. dollar gained against the yen on Wednesday as globaJl equity markets stabilized. On Tuesday, the yen climbed sharply against the dollar after the Bank of Japan (BOJ) refrained from offering any additional economic stimulating measures. In addition, the central bank also did not take any measure to stop the volatility in the Japanese bond market.

At last check, the U.S. dollar was up 0.59% against the yen to trade at 96.59 yen, having climbed as high as 96.70 yen during European trading hours while the euro was down 0.23% against the USD.

On Tuesday, the U.S dollar fell almost 3% against the Japanese currency. Against the euro, the dollar fell to its 3 ½ month lows. Hardened policy stance from the BOJ and increasing fears that the Federal Reserve might soon start tapering its multi-billion dollar asset purchase program triggered panic sell off in global equity markets on Tuesday. The dollar also felt the pressure as edgy investors looked towards yen and Swiss Franc for safety.

Traditionally, in times of macroeconomic uncertainty, investors tend to look towards yen and other currencies such as Swiss franc that are considered very liquid and hedge against uncertainty.

“We are seeing a shakeout of the long dollar/short yen trade, given that the BOJ has refrained from taking additional measures,” said Mankesh Jain, head of FX and Investment, Management at hedge fund Solo Capital, according to Reuters.

Still, the U.S. dollar could remain vulnerable in case global equity markets show any signs of weakness in coming days.

On Tuesday, the U.S. dollar Index fell to its 3-½ month low of 81.034, showed a data provided by Reuters.

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edliston
Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.

Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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