Japanese Yen Trims Gains Caused by Risk Aversion

The Japanese yen gained intraday on risk aversion but has trimmed its gains by now. Currently, the yen trades above the opening level against the US dollar, flat versus the euro, and below the opening against the Great Britain pound.
The clash between the European Union and Italy over the Italian budget continued to spoil the traders’ mood. Adding to the negative sentiment on the market was the downgrade of the global growth by the International Monetary Fund. Maurice Obstfeld, IMF Chief Economists, commented on the downgrade:

And there are clouds on the horizon. Growth has proven to be less balanced than hoped. Not only have some downside risks that the last WEO identified been realized, the likelihood of further negative shocks to our growth forecast has risen. In several key economies, moreover, growth is being supported by policies that seem unsustainable over the long term. These concerns raise the urgency for policymakers to act.

As for Japan’s macroeconomic data, it was mixed. The current account surplus shrank to Â¥1.43 trillion in August from Â¥1.48 trillion in the previous month instead of widening to Â¥1.52 trillion as analysts had predicted. The Economy Watchers Sentiment reported by the Cabinet Office was 48.6 in September, little changed from the August’s reading of 48.7, whereas experts had predicted a decline to 47.3.
USD/JPY dropped from 113.23 to 113.03 as of 17:49 GMT today. EUR/JPY was flat at 129.88. GBP/JPY advanced from 148.15 to 148.55, bouncing from the daily low of 147.35.

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