Japanese Yen, the US Dollar, and the Common Currency

Japanese Yen, the US Dollar, and the Common Currency

Against the United States dollar, the Japanese yen rises to a two-week high. Against the United States dollar, the Australian dollar jumps to a 7-week high.

Amid an easing in coronavirus lockdowns in several countries, traders grew less averse to risk. Thus, on Monday, the United States dollar fell across the board.

Investors became more positive about Italy. They saw the Bank of Japan continuing to support an economy battered by the virus. Thus, against the euro and the Japanese yen, the United States dollar was weaker.

Lee Hardman is a currency analyst at MUFG. He said that the United States dollar had started the week on the back foot. Thus, it is reflecting more risk-on conditions of trading at the start of this week.

Hardman said that most notably, there was a sharp drop yesterday. The decline concerned the reported number of COVID-19 fatalities in several countries. That is providing further encouragement that lockdown measures are highly effective.

Dollar and Others

On Friday, credit-rating agency S&P reaffirmed Italy’s BBB rating. Nevertheless, many were expecting a downgrade. Though, there was support for the common currency with a limitation of the escalation of the political and economic crisis on the continent.

Moreover, the Bank of Japan expanded its stimulus to help companies hit by the coronavirus crisis. It pledged to buy unlimited amounts of bonds. It was to keep borrowing costs low because the government tries to spend its way out of the deepening pain of the economy.

Having fallen earlier to a two-week low of 107.05, the United States dollar shed 0.4% of its value against the Japanese yen to trade at 107.11 yen.

The common currency was up 0.3% at $1.0848.

Traders are now shifting their focus to a United States Federal meeting. It will end on Wednesday. Also, an European Central Bank (ECB) meeting will take place on Thursday. The major central banks, once again, will take the stage as the global economy is battling against a deep depression.