Yen helped by Japan recession news

Yen helped by Japan recession news

Story link: Yen helped by Japan recession news

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The Japanese yen was stronger Monday on the chance that falling equities markets will send investors toward safety and away from risky currencies investments.

The news that Japan’s economy is now in recession was seen as good news for the yen, as economic weakness will also likely discourage investors from using the yen to finance risky carry trades.

In late morning trade in New York the yen was at ¥96.725 to the US dollar, although it had weakened to ¥122.773 to the euro.

The Australia and New Zealand dollars were hurt by Japan’s decline into recession on the likelihood that investors will back out of investments in the two currencies, but both gained back some of their declines later on.

The Aussie was worth 65.21 cents US and ¥63.0792 at late morning in New York while at the same time the kiwi was trading at 55.63 cents US and at ¥53.854.

Declines for the US dollar came on a forecast from the National Association for Business Economics that the US economy will contract by 0.2 percent next year.

The greenback was also hurt by a report from the New York Federal Reserve showing that November manufacturing activity in New York state was at minus 25.4, falling from minus 24.6 in October, leaving manufacturing in the region still in contraction.

Another report from the Fed, however, showed that US industrial production as a whole was up more than expected in October.

The dollar weakened to $1.2693 to the euro in late morning trade in New York.

The pound, meanwhile, gained on both the greenback and the euro after early declines on a forecast from the Confederation of British Industry that the UK economy will contract by 1.7 percent next year and a separate report from Right move (LSE: RMV) showed that asking prices for UK homes fell 7.1 percent in November.

At late morning in New York the pound was trading at 84.33p to the euro while it took $1.5052 to the US dollar.