The yen gained traction against its peers during Asian morning trade Thursday, rising above the ¥100 — line versus the dollar again, on the Federal Reserve’s cautious stance in raising rates and weakness in Tokyo stocks prompting buying of the Japanese currency.
The greenback USDJPY, -0.19% fell to as low as ¥99.64 earlier in the session, coming close to ¥99.55 set on Tuesday — the lowest level since the U.K.’s decision to leave the European Union in late June. The U.S. currency rose back above the ¥100 — threshold, changing hands at ¥100.16, but still below ¥100.28 late Wednesday in New York.
The euro EURJPY, +0.08% dropped to as low as ¥112.65 before coming back to ¥113.23 midday. The common currency was at ¥113.20 late Wednesday. The pound GBPJPY, -0.02% fell to as low as ¥130.02 from ¥130.76, before bouncing to ¥130.70.
The Fed’s minutes from its July 26-27 policy meeting released overnight showed members of the Federal Open Market Committee were split on the timing of an interest rate hike. The minutes suggested a rate increase is a possibility as early as September, but that the Fed won’t commit to moving until a stronger consensus can be reached about the outlook for growth, hiring and inflation.
That dampened sentiment for some investors who were anticipating more hawkish signals especially after Fed officials remarks earlier this week flagging the possibility of a rate increase in September.
Weakness in Tokyo stocks also bruised the market sentiment, prompting buying of the perceived safety of the Japanese currency. The Nikkei Stock Average NIK, -1.55% fell 1.1% in early morning session, before trimming losses to a 0.2% fall midday.
“I don’t think investors are buying the yen aggressively,” said Marito Ueda, director at FX Prime byGMO. “To put it the other way around, there is no reason to buy the dollar and others in a positive manner,” given the Fed’s cautious stance toward raising short-term rates and continued thin market volume due to the summer holiday, he said. “
The possibility is now even lower of Fed chair (Janet) Yellen giving hawkish signals to smooth the way for a September rate increase” at the Fed’s Jackson Hole symposium on Aug. 26, said Nomura Securities chief FX strategist Yunosuke Ikeda in a morning note. He added that he expects any full-fledged dollar buying will now be pushed back to November-December.
In other currency trade, the euro EURUSD, +0.2746% briefly hit $1.1328, its highest since June 24 shortly after the Brexit vote, amid a broader dollar selling. That compared with $1.1291 late Wednesday.