Yen Rises as Stock Losses Spur Demand for Safer Assets

The yen had a day of massive gains versus the main high-yielding currencies as Asian stocks fell after speculations that a report may indicate a slowdown in U.S. industrial production, creating a risk aversion sentiment among traders.

After a day of weak performance in most of the global equities markets, the yen rebounded, after several weeks of losses caused by improved confidence among investors, triggered to take higher-yielding positions in the stock and currency market. Speculations that a report to be released today will show that the industrial production fell for the seventh month in the United States brought back concerns about the world economic future, and the yen, regarded as a refuge investment, driven by a decrease in the risk appetite, posted the highest gains in more than a week. Emergent markets and commodity linked currencies had the most significant losses against the Japanese currency.

The movement in the yen can be perceived as a feeling of uncertainty in markets around the world, even if the recent reports coming from multiple nations with different economic profiles showed better than expected results, economists say it is not a definitive sign that the global recession is entirely buried. The yen may continue to post gains like these of today, as long as the uncertainty remains strong towards the world economic future.

USD/JPY fell heavily to 96.77 as of 11.42 a.m GMT from a rate of 98.15 previously. EUR/JPY followed the same trend, bottoming at 132.90 from 137.10.

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