Key points:
- US dollar gains 1.5% to yen.
- Pair goes after coveted ¥150 mark.
- Carry trade now in rearview mirror?
Japanese yen gave back some of its recent gains as dollar bulls stepped their game up and went on to seize ¥150.
- The
USDJPY pair is back on the offensive after a rattling few weeks, which chipped away at the dollar’s valuation against a strengthening Japanese yen. Dollar bulls made fresh advances Friday morning, extending a 1.5% Thursday run, and are now chasing the coveted ¥150.00 mark after it was taken from them in a rushed bear attack. Robust retail sales data added fuel to the dollar’s sprint yesterday. Since August 5, the dollar-yen has gained more than 5% to trade around ¥149.00. What happened on August 5? - The wheels fell off the market. Globally. No seriously. Panic selling cost global markets trillions of dollars as the Japanese yen rallied and traders dumped risk assets in fear of recession and something called “carry trade.” Investors who had borrowed in cheap yen to invest in high-yield assets rushed to pay back their yen debt, which got more expensive after the Bank of Japan hiked rates to a high not seen since 2008.
- With the carry trade now largely in the rearview mirror, dollar buyers caught forex markets off guard and stepped their game up. The greenback added pips against the euro with the EUR/USD pair drifting under $1.10 right after it peaked to a fresh 2024 top. The GBP/USD, on the other hand, advanced on a stronger British sterling after data showed the UK economy grew 0.6% in the second quarter, after a 0.7% rise in the first quarter.
