Yen Creeps Up as Investors Stay Cautious

A general fall in commodity and stock prices across the main global markets raised the yen on Friday as investors threw cash into low-danger assets amid fears about on-going decreased inflation and negative interest rates.
TOKYO, Japan - June 29, 2016 - PRLog -- A four year crest against the euro was reached by the yen, a currency that investors will gravitate to in times of low confidence. It also reached a six-week high against the greenback.

"What we are observing is a mood of supreme cautiousness," said Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management. "Yields are down as well as stocks."

Poulson also commented that 10-year yields both in Britain and Germany moved to record lows on Friday as the pressure transferred to the banks and the market on a global scale.

Meanwhile, crude prices fell back from their annual peaks but still held firm above fifty dollars per barrel.

The dollar and euro stabilised against the yen slightly as Wall Street made a late attempt to move stocks into positive territory.

The greenback also gained against its main basket peers due to a surprise decline in US jobless claims and an encouraging gain in last month's wholesales. This will take the edge off growing fears the domestic economic growth is decelerating in the current quarter.

Experts see the Fed holding off on rate increases until after the E.U. referendum in Britain on June 23rd. This would in turn allow the greenback to hold steady in a narrow range before the Fed's meeting in a weeks' time.

"We don't think the NY Federal Reserve board are going to take any immediate steps regarding the interest rate hikes," said Poulson. "There is going to be some serious stock taking to be done after various European political situations are more settled. The eyes of the world markets are firmly on Europe and especially Britain at the moment. I think confidence will flood back once Brexit fears are done with."

At close yesterday the euro was half a percentage point lower against the pound, while sterling itself was down 0.2 percent at $1.4496.

In New Zealand, the central bank shocked many investors by leaving rates unchanged at 2.26% amid inflationary complications and a jump in average house prices.

The move by RBNZ pushed the NZ dollar to a new peak versus the greenback in 2016 as it closed up 1.5 percent at $0.7156.

Nikko-Desjardins Asset Management
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