DFX: Japanese Yen and US Dollar Rally as Dow Jones Falls Further
The Japanese Yen and US dollar rallied through early New York trade, as sharp drops in the US Dow Jones Industrials Average and European equity indices forced noteworthy corrections in risk-sensitive currencies. Indeed, the Dow lost over 300 points at the peak of their losses, and overall sentiment remains bearish on broader stock indices.
Given continued losses, we could almost definitely see the Japanese Yen and US dollar continue to strengthen against major forex counterparts. The rolling correlation between the Euro/Japanese Yen pair and the Dow gained sharply through recent trade—emphasizing the Yen and Euro’s strong links to global risk sentiment. We will subsequently need to watch price action in equities to gauge the likely direction of major Yen pairs.
