Dollar-Yen Stages Sharp Recovery to Upper 157 Range Amid Geopolitical Risks
The dollar-yen pair staged a sharp recovery to the upper 157 range in Tokyo foreign exchange trading on Monday, August 10. The volatile move was driven by resilient U.S. equities and rekindled geopolitical risks.
After plunging to the mid-156 range following Friday's U.S. employment report, which showed nonfarm payrolls fell by 23,000 month-over-month, a negative print that massively undershot market expectations for an 80,000 increase, the dollar staged an aggressive short-covering rally back to the upper 157 range within just half a day.
The U.S. employment report also sparked concerns over a U.S. economic slowdown and tempered market expectations for near-term rate hikes by the U.S. Federal Reserve. However, escalating tensions surrounding Iran's declaration that the Strait of Hormuz would remain closed until the United States lifts sanctions and pays war reparations fueled geopolitical risks, driving yen selling and dollar buying.
WTI crude oil futures rose at the start of the week in response to the increased tensions, further supporting the dollar-yen recovery. The pair traded at 157.92 yen as of 8:00 a.m., roughly 16 sen stronger than the New York close.