Yen Drama Over US Payrolls?
Text message from a trader at 2328 hours: “Do you know what’s happened in the world? In the last hour, the markets went ridiculous. Not complaining, as they’re flying in my favor, but I’m too busy placing new stops, etc, to check on the news. Something must have happened…they’re moving like crazy…look at the yen go !!!” Indeed, the yen did go – and it kept going.
The yen climbed to the highest in more than a year against the euro on concern the credit-market slump will lead the world into a recession, prompting investors to sell higher-yielding assets funded in Japan.
The dollar fell versus the yen before a U.S. government report that will probably show employment dropped for an eighth month. The yen also jumped to a two-year high against the Australian and New Zealand dollars as stocks and commodities slumped. The pound dropped for a ninth day versus the dollar.
“This is a global recession story,” said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain’s third-biggest lender. “The yen is benefiting as risk appetite is on the decline.”
Against the euro, Japan’s currency climbed to 150.60 yen, the strongest since Aug. 17, 2007, before trading at 151.40 yen as of 9:23 a.m. in London, from 153.40 yen. The yen reached 105.69 per dollar, the highest since July 17, before trading at 106.25, from 107.08. The euro fell to $1.4248, from $1.4325. It earlier touched $1.4214, the weakest since Oct. 24. The euro may decline to $1.40 in six months, Umemoto said.
U.S. payrolls fell by 75,000 after declining by 51,000 in July, according to the median estimate of 76 economists in a Bloomberg News survey before the Labor Department report due at 8:30 a.m. in Washington today. The unemployment rate likely stayed at a four-year high of 5.7 percent.
