The growing uncertainty clouding Europe’s ability to fix its financial mess has helped send safe-haven investors into the Japanese yen and pushed the currency to a new post-World War II high against the greenback.
CurrencyShares Japanese Yen Trust (NYSEArca: FXY) rose fractionally on Tuesday to a fresh 52-week high. The exchange traded fund profits when the yen strengthens versus the U.S. dollar.
After news that a meeting of Eurozone finance ministers was called off, investors quickly turned to a risk-off mentality, WSJ.com reports.
However, the traditional safe-haven U.S. dollar was kept depressed on weak U.S. housing and consumer-confidence data, which boosted speculation of another quantitative easing plan from the Federal Reserve to boost the economy. Consequently the Japanese yen picked up the slack, appreciating to a new high of ¥75.73 to the U.S. dollar. [Japanese Yen’s Spike to Record Against Dollar Lifts Currency ETFs]
“You’re seeing a general flight-to-quality, risk-off type of sentiment, and the yen is a frequent recipient of those moves,” Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA, said in a Bloomberg report. “The market is watching the events in Europe.”
According to Nikkei, the Bank of Japan will be discussing monetary easing measures at a policy board meeting Thursday due to the rising strength of the Japanese yen.
CurrencyShares Japanese Yen Trust
For more information on the yen, visit our Japanese yen category.
Read the disclaimer; Tom Lydon is a board member of the funds for Rydex|SGI.
Max Chen contributed to this article.