The yen sagged to fresh lows on the euro, sterling and other crosses this week and headed for a fourth weekly drop on the dollar as investors chased better yields just about everywhere but Japan, wagering rates there would stay near zero for some time.
The yen is the worst-performing G10 currency this year, with a 6.4% slide on the dollar. The greenback is the best performing.
For the week the yen is down 0.6% on the euro, touching its weakest for three months overnight at 163.45 per euro . It dropped by the same margin on sterling to hit its lowest since late 2015 at 190.83 and made nine-year nadir on the Australian and New Zealand dollars.
Yen moves against the dollar were more modest due to the risk its slide could prompt intervention in markets from Japan, with officials reminding traders they stand ready in recent days.
The dollar gained 0.1% to trade at 150.41 yen this week . Moves early in Friday's Asia session were small.
With Deutsche Bank's foreign exchange volatility index, collapsing to two-year lows and markets backpedalling on bets for deep rate cuts in the U.S., Europe and Britain - leaving yields elevated - the trade is profitable.
At the two-year tenor, the gap in yield between Japanese and U.S. government bonds is more than 450 basis points . Positioning data shows yen shorts jumped last week.
Elsewhere the flow into higher-yielding currencies helped lift the Australian and New Zealand dollars. The kiwi topped 62 cents overnight and last bought $0.6197, shrugging off weak retail sales data as traders weigh a possibility that the central bank hikes interest rates next week.
The Australian dollar , which has edged above its 200-day moving average this week, rose 0.1% to $0.6563 on Friday for a weekly gain of 0.5%, its largest in two months.
The euro is set for its largest gain in two months as well on the back of a steady reduction in the scale of interest rate cuts expected this year, with markets now pricing about 90 bps of cuts from about 160 at the end of 2023.
Stronger-than-expected purchasing managers' surveys out overnight added to the case for caution in cutting rates.
The euro last bought $1.0836. The U.S. dollar index was down 0.3% for the week at 103.91. Sterling was up 0.5% on the week to $1.2658.
Source : Reuters
