(Bloomberg) -- The yen and euro jumped to its highest level against the dollar since January as traders unwind carry trades globally after risks of a recession in the US rose.
- Bloomberg Dollar Spot Index fell 0.3% Monday adding to a 0.7% drop in the previous session
- “The market has gone into the data pricing very aggressive Fed easing and this has hurt the USD vs the likes of the JPY, CHF and the EUR,” said Valentin Marinov, head of G10 FX strategy at Credit Agricole. ISM data Monday “helps ease the US recession fears, at least for now,” he said
- READ: US Services Activity Expands at Modest Pace as Orders Rebound
- US is “uncomfortably close” to a recession, but not yet in one, according to Former Federal Reserve economist Claudia Sahm
- EUR/USD rose as much as 0.9% to 1.1008, highest level since Jan. 2
- “Though the euro zone economy is still sluggish at best, it looks like the region may be on the upswing while the US is on a downward trend, and we’re seeing that play out in a big way in central bank expectations,” said Helen Given, a foreign-exchange trader at Monex Inc. Markets, who sees “substantially more moderate easing” by the European Central Bank than the Federal Reserve, letting the euro gain, she added
- READ: Euro Jumps to $1.10 on Bets Fed May Go Beyond ECB on Rate Cuts
- USD/JPY dropped as much as 3.3% to 141.70
- READ: Carry Trade Unwind Extends as Peso Sinks, Yen and Yuan Surge
- “The sharp strengthening of the yen and the BOJ’s hawkish policy update are contributing to the underperformance of the Japanese equity market after years of outperformance,” said Lee Hardman, senior currency analyst at MUFG
- Traditional safe-haven currency, the swiss franc, surged to its strongest level in over nine years; EUR/CHF fell as much as 1.6% to 0.92108, the lowest level since 2015
- Some information comes from an FX trader familiar with the transactions who asked not to be identified because the person isn’t authorized to speak publicly
Reporting by Anya Andrianova
